Pros and cons of a forward contract

• Potential for total cost to be more compared to not fixing
• Potential costs if your plans change

Are there any risks?

Once you agree a rate with us, we secure the currency at the same time – so if exchange rates improve between then and your completion, your rate won’t improve. However, the reverse is also true – it won’t get worse either. A Forward Contract is a way of fixing your budget in sterling, not a way of guaranteeing the best exchange rate in the time available.

Costs if the rate improves

For a €200,000 completion, let’s say you use a Forward Contract to fix your rate and the Pound then increases against the Euro by 5% between then and your completion. You will have paid around £8,500 more compared to the price if you had bought your currency just before your completion 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 exchange rate before you go ahead – we are operating in a volatile financial market and are usually unable to adjust exchange rates once agreed, even if you are later offered a different rate elsewhere or on a different day.

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.

You can also split your transaction into ‘tranches’ and fix a rate for some of your total payment, which can be a good idea for larger transactions. Again, we can talk you through all the options that we’ve seen people use over the years.