This French foreign exchange guide will help you save money on all your foreign exchange transactions for personal or business needs.
Foreign exchange charges can significantly increase the cost of your French mortgage repayments for the life of your mortgage, yet they are one of the easiest areas where you can make big savings.
Your starting point to saving money on foreign exchange should be to check whether you are presently overpaying for your foreign exchange by using your local bank, building society or post office.
The easiest way to check whether you can save money on foreign exchange is to compare the full price you have been paying for your foreign exchange with the current spot rate from the ECB (European Central Bank). Don’t forget, you need to include all the charges and commission in your comparison not just the exchange rate you have been paying.
Save Money on French Foreign Exchange
Most people now recognise that their high street bank, building society or post office will not give them as good a deal on Foreign Exchange as they could get from a specialist currency dealer.
This is especially true if the sum is large, such as a French mortgage deposit, or if the payments are regularly recurring, such as with French mortgage repayments.
It is all too easy to become bewildered by the proliferation of currency exchange bureaux advertising their services. When we checked, our search software found 95 million references to foreign exchange on the Internet – that’s up from 43 million in 2008!
To save you having to do the research yourself, Best French Mortgage decided to select a foreign exchange partner that would give our clients an exemplary foreign exchange service, the best possible foreign exchange deal and with no broking commission charges.
Advantages of a Foreign Exchange Account
- All Client funds are sent via SWIFT payment from secure Client accounts, giving you peace of mind that your payment will arrive at its destination swiftly, securely and on time.
- Best foreign exchange rates in the market.
- No commission charges (banks charge up to 2% commission).
- No transfer fees (banks charge up to £45 per transaction).
- Secure online access with visibility of your currency trade via an online payments system.
- Forward contracts to fix your rate and cut your risk.
- UK and International payments sent same day with no hidden costs.
- Your foreign exchange can be charged to your credit card or funded from a bank account.
- A French-based representative available to help you if needed.
A Client’s Experience
Let’s look at an actual client transaction where one of our clients compared their own high street bank with an FX specialist.
Though the rates are historic, the saving will be just as big today.
High Street Bank Foreign Exchange Rate
Our client was transferring a €200,000 to their Notaire in France.
Their high street bank quoted an exchange rate of €1.2310 to the £, so if our client had used their bank to complete the transaction they would have had to pay £162,469 in order to buy €200,000.
The bank would also have charged a commission of 1.5% (with some banks this is up to 2%) and a transfer fee of £45 to send the funds to France.
Foreign Exchange Broker Exchange Rate
Using their new foreign exchange trading account, our client achieved a much better foreign exchange rate of €1.2505 to the £, so the €200,000 only cost them £159,936 (a saving of £2,533).
They were not charged any commission nor were they charged any transfer fees to send the foreign exchange to France
Save More – Buy Foreign Exchange Forward
Everyone knows how volatile currency markets can be and you can save even more money on your foreign exchange by avoiding future currency movements.
Though future market movements are always uncertain, FX currency specialists can help you minimise the risk of being caught out by an adverse currency movement.
This is particularly important in the 2-4 month period between your offer being accepted and the day you have to pay the difference between your mortgage and the purchase price on purchase completion.
Again, let’s look at the actual example.
Foreign Exchange Broker Forward Rate
Our client’s offer to buy their French property was accepted in May and the compromis signed.
The acte (completion) was agreed for November when the property would be finished and ready for our client to take possession.
Our client was concerned that if they waited until November to purchase the foreign exchange the exchange rate could move against them.
To avoid this risk our client used their foreign exchange trading account to buy the Euros on a ‘forward contract’.
This contract ‘fixed’ the rate of exchange at 1.2505 (the rate in May) but allowed for their payment to be deferred until November. This is because, with a forward contract, you only need to pay a 10% deposit at the time of the trade in May to secure the funds in November at the agreed rate.
In the event the rate worsened from €1.2505 in May to €1.2129 in November, thus this client saved £4,958.03 by buying using a forward contract.
Mortgage Foreign Exchange Planning
Once you have regular payments to make in a foreign currency don’t leave your currency requirement until the last-minute, but plan ahead to save money.
Because you FX needs will be predictable and known in advance they can be cost effectively managed by using FX planning – read our page on Foreign Exchange Planning