DO's and DON'Ts of Currency Exchange
1. Don't use your bank. High street banks can charge you up to 5% if you ask them to convert your pounds to Euros. They may claim to have no commission, but some will then give you a very poor exchange rate which means you can often lose out by thousands of pounds. Add to that the hefty charges for sending money abroad and you will be left without many good things to say about your bank manager.
2. Do consider using a currency broker. Currency brokers are specialists in currency exchange who can help you get a much better exchange rate than you would get from your bank. In real terms, this can be as much as saving 5% on the value of your house.
3. Don't leave it until the last minute. Currency exchange rates move up to 3 times per second, often around significant economic events. If you use a currency specialist they can keep you informed about what is going on as well as telling you about any trends in the marketplace which could save you money. You're probably planning every other aspect of your big move to France, don't ignore the money until the last minute.
4. Do ask your broker's opinion. If you're using a currency specialist, then make use of them - they generally know what they're talking about and want to help you get a good exchange rate. Currency specialists can't give you financial advice the same way an accountant or IFA might, but they are usually happy to offer an opinion or tell you what they would do in your shoes.
5. Do consider a forward contract. The completion process in France can often take several months, during which time the exchange rate will go up and down like a yo-yo. This means that your purchase price fixed in Euros will cost you a different amount in Sterling every single minute, and if it goes the wrong way, your house could cost thousands of pounds more than you had planned. Luckily, you can get around this by using a Forward Contract. This allows you to fix your exchange rate when you agree the purchase, so you can sleep a little easier without worrying what the exchange rate will be doing the next day.
6. Do check that your currency specialist is properly regulated. If you are using a currency specialist, you will have to send your money to them for conversion into Euros, and you don't want to do that unless you are confident in the company you are using. The minimum standards you can expect are: i. FSA Registered or Authorised under the Payment Services Regulations; ii. HMRC Registered as a Money Service Business; iii. All client funds should be kept in segregated client accounts (like a solicitor would) for your protection if anything were to happen to their company. If your currency broker doesn't have all of these three as a minimum then they could be breaking the law and you may prefer not to deal with them. There are plenty of reputable companies out there!
7. Do register in advance. Currency brokers need you to register with them in order to comply with their regulations. It's free to register with most currency brokers and there's no obligation to use their service once you're registered. It will only take you 2 minutes but some things are easier done in advance than when you've agreed your sale and have a short amount of time to do a million different things to prepare.
8. Do set up a French Bank account with a local branch in your area of France if you're buying a holiday home. You can use it to pay the utility bills and for banking when you're in France. Your currency broker can also send your money directly to your account so you don't have to go to the Bureau de Change at the airport.