If you are purchasing a property in France, the purchase must be completed in Euros. If you are financing the property with a French bank, the mortgage payments will also be established in Euros. If that is not your home currency, there are important resources to be aware of that can help you to minimize losses on exchange rates and moving money across borders. Getting the best currency exchange rates, and setting up a mortgage safeguard to hedge against currency fluctuations, are important parts of any smart investment strategy.
Currency exchange brokers
The French government requires that the funds on a real estate purchase pass through the notaire’s escrow account. That means, a seller and a buyer from the same country must still both change their funds into and out of Euros to complete the purchase.
At the signing of the preliminary purchase agreement, the seller must pay between 5-10% of the purchase price into the escrow account. When the sale closes, they must pay the remaining amount.
Working through mainstream banks to make these payments can be extremely costly: international wire transfer fees and exchange rate commissions charged by your bank often add up to a healthy sum. A currency exchange broker, like FC Exchange, purchases currency in bulk at wholesale rates. Specialists in this field, they offer exchange rates that are up to 5% (5 cents on the dollar) better than what you would get at your own bank, saving literally thousands of dollars on large transactions. What’s more, they offer a variety of products – forward contracts, spot contracts, limit orders and stop loss orders – to help buyers (and sellers) hedge against exchange rate fluctuations between the preliminary contract and the final purchase. Working with an international currency broker will save you time and money, and eliminate one unknown from an important property purchase.
Protect Yourself Against Market Fluctuations
Mortgage repayments and international money transfers are, when made over years to come, subject to considerable rate fluctuations as the markets invariably move up and down. That is where a forward contract option from a currency broker can provide security and visibility for buyers whose funds are not in the local currency. With a forward contract, the buyer secures the existing rate of exchange for successive currency transfers for up to 24 months. This way you know exactly what it is that you will pay in your currency for your mortgage payments in the near future, with no nasty surprises as currency exchange rates change.
Particularly for large purchases – like your next Paris apartment – exploring the best options for currency exchange rates is key.