24 July 2011
Posted in Property Info

Whether you’re living here in Golf del Sur, receiving income or cash from the UK regularly, or if you are transferring money from the UK for a one-off purchase of your property in Golf del Sur, you need to ensure that you get the most out of these transfers and that they are not subject to a poor conversion rate or high fees. Everyone who transfers money these days is aware that comparing currency exchange rates with brokers or banks can be beneficial, particularly with the value of the pound being so low.

The purpose of this article is to explain - in simple terms - how specialist foreign exchange brokers have the ability to offer the most competitive rates and cost-effective solutions for receiving your regular payments or for receiving one-off payments whilst living (permanently or semi-permanently)here in Golf del Sur.

Why use a Currency Broker over a Bank?

I am sure that most of us over the years have had a UK bank account and know the system fairly well. However using the standard banking system, money saving options are often overlooked. There are often unnecessary charges applied along with poor currency conversion rates. This all adds up to you losing out when you transfer money overseas. People often have the misconception that their bank is the safest and only way to transfer their money. This is a myth that needs to be addressed.

According to an analyst from one of the leading currency brokers "The role that firms like his play have becoming increasingly important to clients whose earnings are derived from the UK but living abroad particularly in terms of stretching one’s income to its maximum capacity."

Currency brokers like Currencies Direct who deal in international payments abroad offer exchange rates that are guaranteed to beat the rates provided by the bank.

How do Currency Brokers beat the Banks overseas rates?

Banks for the most part set their buying and selling rates for currency first thing in the morning. You can always see them displayed in your local branch. Currency Brokers however, don’t set the rates in advance. They obtain the best rate possible at the time of the transaction, this is done by putting a call into the currency market floor, and as I am sure you are aware the rates fluctuate quite a lot during the day.

When using a bank, on average a client can lose around £30-£50 unnecessarily on each transfer. Needless to say this can add up to a substantial amount of money over a year. With currency brokers on the other hand, there is no such loss.

For many pensioners living here on Golf del Sur who have seen their pension depreciate over the last few years, it must have been soul destroying as they have seen the amount of Euros in their Bank account decreasing by the month. Sterling, once a watch word for strength and stability, is now nothing but a distant memory. Add to this the fact that the value of the pound affects the value of one’s income and you can see why the affordability of living in Tenerife or other places abroad could be seen to be not as attractive as in previous years.

An independent price comparison site recently and extensively compared the markets, and came to the conclusion that using a Foreign Exchange specialist over the banks can lead to savings of between 2% and 5% on the value of regular transfers overseas. Once again this can lead to saving a substantial amount of money. There is also the added bonus that currency brokers offer customers their own dedicated account manager who will guide them through the whole process.

As money transfers are the core business of Currency Brokers and only a capability rather than a core product of a bank you can see that by using these specialists it can save you money both in terms of fees and exchange rates. It must also be noted that it pays to shop around for a reputable firm to represent you and who will offer you the best service and the best rates.

Fixed rates of exchange and their benefits

Rates of exchange can be fixed for up to 2 years by Foreign Exchange brokers and the best way to explain the value of this service offered by these payment specialists is by using the following real life example.

Client A retired to his Golf del Sur property at the end of 2007 and he needed to receive his Sterling pension in Euros. In January 2008 he explained that the amount of £1,134 was his monthly pension and he wanted to know what options were available to him. Within a short space of time he decided to set up a monthly transfer with a fixed rate of exchange of 1.33 for the following two years. From that month and until the end of 2009 he received €1,508.22 in his Spanish bank account.

If the Client had decided not to use a fixed rate of exchange for his pension, his monthly amount would have decreased on a monthly basis because of the weakening sterling rate and by December 2008 his monthly amount received would have dropped to €1,190.70 which would have amounted to a 21% drop in value.

Conclusions:

For many people living abroad they unknowingly lose money when receiving their monthly pension payments using banks because banks do not offer or even mention options such as a fixed rates of exchange and/or even a fixed time period.

With the way the value of sterling has dropped against the Euro over the past 2 years or so and with no light currently at the end of the tunnel it makes economic sense and is highly recommended to consult a reputable Currency Broker when sending or receiving not only regular payments overseas but also one off payments such as when purchasing a property.

If there is anyone living or seeking to live here in Golf del Sur who would like further advice on the subject, just get in contact and we can offer our advice.

This post was prepared by specialist property experts from Homes and Away. Working for over a decade with clients in the Golf del Sur property market.