I was exploring the various options to changing currency, especially if I was buying property abroad. Everybody's first option is their bank. Their reputation speaks volumes and is rarely discredited. So yes I can understand why people when buying property abroad use their bank as the first option. It would also appear that most times they don't even get a second quote.
Copyright (c) 2008 Phillip Booker
I was exploring the various options to changing currency, especially if I was buying property abroad.
Everybody's first option is their bank. Their reputation speaks volumes and is rarely discredited. So yes I can understand why people when buying property abroad use their bank as the first option. It would also appear that most times they don't even get a second quote.
Whilst I would want to criticize them for lack of financial savings skills, I can also understand that they don't want any headaches; more importantly why should they worry when the banks are offering 0% commission?
Here is the answer... More pennies in your pocket. Why? Allow me to explain further.
In every deal, even at the supermarket, everybody is trying to convince you that they can save you money. My teenage children ask me why there are sofa adverts just before a 'bank holiday'? 40% of Sofa's, 50% of Sofa's and no payment for 2 years... It's not the deal but the bottom line. If you have £1,000 for a sofa, which sofa can you get?
When exchanging currencies the same principle applies. If you are changing £100,000 into Euros and the Bank is offering 0% commission they may give you 122,000 Euros. They are buying the currency wholesale and adding between 3% to 4% profit on top. Currency Brokers however using the same principle would give you 125,780 Euros; their profit margin is almost 1%. The saving is almost £3,000!
It is the bottom line... what will you eventually get for your transfer?
By using what can only be called the new modern system you save yourself £3,000; the larger the amount the better the deal using the Currency Broker. Here are three further real case studies:
Currency Exchange Case Study 1 - Elaine and Robert were buying in Northern France; a second home, but one that required a certain amount of renovation. In November 2007 the Euro had taken a bit of a tumble, so it was imperative that they got a good deal on their currency exchange to help with funds for renovation. The property purchase price was £76,000. Their bank had quoted an exchange rate of ¬1.33 / £1; whereas the broker secured a good price of ¬1.35. This was a particular good deal as days either side the broker could only secure a rate of ¬1.34. The exchange at the bank would have returned ¬101,080. The broker successfully secured ¬102,600; saving them ¬1,520 (£1,125). Elaine and Robert were happy with this saving as Robert had earmarked an inexpensive DIY kitchen.
Currency Exchange Case Study 2 - Ines and Kevin from Glasgow were buying a Duplex in Spain, January 2008; it was a strange scenario, they were renting before they bought. They had lived in Spain for approaching 11 months and had left their house sale money in their bank in Scotland. Because of their purchase they had been advised to use a broker. Rather than use the broker that the building company recommended, they had chosen to look on the internet. Fortunately they had found a Currency Broker. Most brokers can always beat a bank's quote, it isn't so easy to beat another broker. The Currency Broker saved Ines and Kevin ¬1,300 Euros over another broker, but nearly ¬6,200 Euros against the banks
Currency Exchange Case Study 3 - Helen and Darren from Bootle in Cheshire had taken 9 months to purchase a villa in Pescara in the Abruzzo region of Italy for ¬650,000; January 2008. Sadly when a house purchase takes so long there can be fluctuations in the currency rate, and on this occasion it wasn't in Helen and Darren's favour. So it became even more important to save on the currency exchange. Had they gone to a bank they would have paid ¬8,100 more than what they paid a Currency Broker. They successfully managed to save them £6,090.
Helen had pointed out to me a consideration that since there are British banks that operate in Spain, you can just make your money transfers from the UK to the Spanish branch of the same bank and pay no charges at all, but unfortunately that's not possible. These banks are British by name but are totally separate from their British parents. To name but a few there are Barclays, the Royal Bank of Scotland (affiliated to the Santander bank) and Solbank, owned by Banco Sabadell, then of course the other big two Halifax and Abbey (Abbey also being affiliated to Santander Bank).
Financially savvy people prefer to leave overseas money transfer requirements up to their foreign currency brokers. These specialists operate on behalf of hundreds of clients and get much better conditions in the currency wholesale markets, just like financial brokers do for investors who invest their savings on collective investment funds to get a better return.
Always get two or more quotes when transferring large amounts of money overseas.
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