How do Limit Orders work?
If you are undecided when to secure your exchange rate but have a “target” rate in mind, you can use a Limit Order to automatically buy your currency if rates improve.
A Limit Order will automatically buy for you should the market move in your favour.
You can set any rate you like, but of course the higher you aim, the less likely the order is to “fill”.
Limit Orders are “good until cancelled” and will be placed in the market on your behalf until they either “fill” (in which case we will inform you immediately) or are cancelled. You can discuss this type of order with your dedicated account manager at A Place in the Sun Currency before going ahead – you don’t need to send us any funds in advance, but once an order has been filled we ask for payment of the selling currency (usually Pounds sterling) within a couple of days.
As currency markets move every second 24 hours per day, Limit Orders also reduce the need for you to track rates – even if markets move overnight to your desired level, your currency will be automatically bought and we’ll let you know in the morning.
When are Limit Orders typically used?
When buying overseas property, you might be waiting for a particular rate to be available before you secure a rate for your completion amount. If you think rates might improve, you can use a Limit Order which could reduce the sterling price of your property should it successfully “fill”, compared to buying earlier.
It’s not unusual for rates to change by 5-10% in a 3-month period, so a completion payment could change by thousands of pounds if you leave things to chance. Using a Limit Order can lock in to a better rate, should markets move in your favour.
Are there any risks?
The main risk with a Limit Order is that the market moves the wrong way and the order doesn’t “fill”. You would then be left buying at a lower exchange rate than you had bargained for when completion time comes – so you would need to make sure you have some spare budget available to pay more for your property if the market falls, instead of rising.
On the other hand, once your Limit Order has “filled”, your currency is bought, and the rate can’t improve any further. So if the market continues going up even more in your favour, a Limit Order will also mean you can’t take advantage of any further savings.
Example Savings – Limit Order “fills”
For a €200,000 completion, let’s say you use a Limit Order to aim for a rate 3% better than currently available. If the Pound then improves against the Euro by 3% between then and your completion, your currency will automatically be bought and you will have saved around £5,000 compared to the price if you had bought your currency on the day you placed the Limit Order.
Example Costs – Limit Order doesn’t “fill”
For a €200,000 completion, let’s say you use a Limit Order but the market actually falls by 5% between then and your completion, and you buy your currency just before the completion payment is due. You will have paid around £8,500 more compared to the price if you had bought your currency on the day of your Limit Order instead.
In addition, once you’ve placed your order, you are entering into a legally binding contract with us. So it’s best to ensure you are definitely happy with the target exchange rate before you go ahead – it’s important to cancel the Limit Order if you decide to buy your currency with us or elsewhere instead, before it has filled. Otherwise you could end up buying your currency twice, which will typically incur losses to sell half of it back to the market again.
Everybody has different circumstances and attitudes to the risk presented by changing exchange rates. We will work with you to give you all the options available, in simple terms, to help you decide what’s best for you.
What if I don’t settle?
If for any reason you place a Limit Order with us which “fills” and then don’t pay for it, we will need to sell the currency you ordered back to the market. Depending on market movement, that could create a loss, which you would be liable for, so it’s best not to place an order if you aren’t sure you want to go ahead for any reason. Please see our terms and conditions or call us for more information.
How long will my money take to arrive?
International payments take longer than domestic payments in the UK. There are a number of variables, and the absolute maximum time it can take is set out in our terms and conditions. We also have to complete internal compliance, anti-fraud and anti-money laundering checks before payments are released, which we will do our best to advise you of in advance in complex cases. If your Limit Order “fills”, then once you have paid us for your currency and these checks are completed, typical payment times are shown below in working days, although we can’t guarantee these because we are relying on a chain of banks to process your payment through to its destination.
The receiving bank may not credit your funds instantly, but we can confirm the date on which they received them.
For Euro payments to the EEA, we use banking facilities in Germany to send your payment, to help reduce or avoid any bank charges at the receiving account. This does not add any extra time to payment processing.
- Euro payments: same day if sent before midday, otherwise next day
- US Dollar payments: same day if sent before 5pm, otherwise next day
- Sterling payments: same day if over £30,000, otherwise next day
- Other currencies: 1-4 working days depending on currency and destination