A Sterling Fall on Properties Abroad - Top Tips to Avoid Losing Out on the Rate

LONDON - Small shifts in foreign currency exchange rates are common and happen in short spaces of time. However, over the past few days sterling has dropped off steadily by over 2%.

If you have entered into a contract to buy your property abroad (www.worldfirst.com/) and before you’ve paid for it the exchange rate shifts to go against you like this, it effectively increases the sterling cost to you.

For example, last August a house on the market for EUR250,000 would have cost you GBP194,850. But at the moment it would cost you about GBP222,301 - an increase of GBP27,451 in a matter of weeks.

With the pound as volatile as it is against particularly the euro and the dollar, these top tips should help if you are in the process of or are planning to buy a property abroad:

- Plan ahead with a forward contract

A forward contract allows you to fix a rate for a date in the future (up to two years ahead). This means the rate and therefore the sterling cost of your property is fixed regardless of exchange rate moves.

- Book in a currency option

A currency option, like a forward contract, allows you to exchange one currency for another on a future date. However, with an option you can fix a ‘worst case rate’ and unlike a forward contract, if the rate moves in your favour you can benefit.*

- Set up your euro mortgage

If you choose to finance your purchase through a euro mortgage, a broker will also be able to help you fix the exchange rate for your monthly repayments. You can fix your payments up to two years ahead. By fixing the exchange rate you know exactly what your monthly commitment will be in sterling terms. A broker can also introduce you to a number of international mortgage providers.

- Delay your completion date

By putting off the final date on the purchase it could allow sterling to recover, thus making the property more affordable.

- Re-negotiate the price

If the exchange rate will mean that the property will cost you more than you budgeted for, discuss the price with the property sellers.

- Fix a firm order

Place a firm order to buy a set amount of currency at an agreed rate. If the level you set is achieved, the currency will be bought automatically. Therefore you don’t have to worry about watching the rates constantly.

Elisabeth Dobson, of foreign exchange broker, World First (www.worldfirst.com/)warns, “Don’t leave your foreign exchange transactions to the last minute. It could leave you exposed to the prevailing exchange rate and you may not have adequate funds to buy your property. By using a foreign exchange broker like World First, you can protect yourself against negative exchange rate fluctuations. The options above are becoming more and more popular especially given the recent volatility and unpredictability of the currency markets. Forward planning will ensure your property purchase can go ahead as planned.”

* World First is currently the only broker in the UK to provide currency options.

www.worldfirst.com/blog/currency-transfer-news/a-sterling-fall-in- properties-abroad/

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Notes for editors:

World First is a currency exchange broker, serving both private and corporate clients. Set up in 2004 by directors Jonathan Quin and Nick Robinson, the company is experiencing very fast growth and now employs over 70 people in two offices (London, UK and Sydney, Australia). It has 20,000 clients and transacted over GBP1 billion in 2008.

World First’s corporate clients are generally import or export companies, making regular transfers. World First helps them minimise their exchange rate risk and manage their currency exposure.

Private clients largely use broker services to purchase a property abroad, usually a second home or investment or to emigrate.

World First is also now offering currency options to SMEs and private clients through World First Markets Ltd, which is authorised and regulated in the UK by the FSA. World First is the first and currently only broker to offer currency options which have, until now, been the preserve of very large corporate organisations through their banks.

For further information contact: Wendy Casterton t: +44(0)20-7801-1060 e: wendy.casterton@worldfirst.com w: www.worldfirst.com

Source: World First UK Ltd.

For further information contact: Wendy Casterton, t: +44(0)20-7801-1060, e: wendy.casterton at worldfirst.com