Currency Advice in the Canary Islands

Currency Advice in the Canary Islands

For successful Currency Exchange dealings in our experience, Your first task, is to choose your Lawyer and your Spanish Real Estate Agent, and to find a reputable and helpful foreign currency provider to assist you to transfer your pounds to Euros. It is also important to ensure that the service that you recieve is simple enough and effective enough to save you money when you transfer your money abroad, when buying property in Spain. There are many banks and other independant companies in the Spanish Market Place which provide a good and fair service, and look after all your curreny needs.

Can Currency fluctuation affect your buying power?

So many people that buy property for sale in the Canary Islands realise the power that currency fluctuations have over your ability to buy property. In a short period of time, you could loose a significant amount of money to a simple think like currency exchange fluctuations. For example, if you need €200,000 with the bank having decided to buy property in the Canary Islands, and they have offered you a rate of 1.45€ to £1, meaning that you need a total of £138,000. If the bank then asks you for £142,000, a massive £4,000 increase, this often has serious concequeces for many people. However, not many banks and currency exchange companies inform people that there are ways to prevent this from happening.

However, the thing that banks don't want you to know is that you can protect your capital, banking mechanisms called 'stops', 'limits' and other such banking mechanisms, that are used by big business to protect their money. Maybe you could have found a more advantageous rate for exchange in the first place too. The key is to do as much research as you can before exchanging your money.

Can you get the best currency exchange rates?

When deciding to exchange your money, the place where you exchange it is almost as important as the money you exchange it with. There are lots of banks and currency exchange companies to choose from, and your banks rate is not necessarily the best. Normally, the bank will charge you a worst rate, mostly because of the larger banks earn their money from dealings with corporate millions, as opposed to the kind of people who are trying to buy property in Spain. It will pay for you to shop around.

How can you protect your capital against such an eventuality?

Ensure that your currency provider makes the financial mechanisms like 'stops', 'limits', 'forward contracts' available to you to protect their capital. They should show you how the mechanisms work providing active examples about every way that you can protect your currency exchange transaction. When buying outright, by definition, the deals often take a certain amount of time, which is why if you wish to make a spot transaction meaning that you buy todays market for cash.

Buying properties under development

It is very easy to buy a property outright, but if you are buying a property in the canary islands that has not been completed, is more difficult. First you must pay a deposit, followed by several different payments and different stages across the buliding process, which unfortunately, you may not know the amounts and dates for. Unless you act to prevent the risk of your money, you may loose money.

How can you avoid the gamble?

'Forward' transactions

This type of transaction is often used by large corporations and comes in two types, the fixed forward transaction and the forward time option, this helps to protect large sums of money and can help you when deciding to buy a property for sale in spain. This is how each one works:

Forward pricing in practice: the 'fixed forward' deal's with the fixed forward. This is a foreign exchange agreement which suggests that if you know the dates that you need to exchange money, you can order it. For example, if you must pay a 10% deposit within the next couple of days and the rest in stages during the coming months, and the balance at 9 months, you are able to offer this information to your currency provider and they can offer you a steady, guaranteed price for each payment.

Forward pricing in practice:

The 'forward Time option' is useful to you if the only information that you have is the final price and a promise from the developer that the house will be completed in the next 9 months time. The exchange company has the ability to guarantee an exchange rate without restricting the date of the actual exchange. So you can secure your money without having all the information about the property that you think you may need. For example, being able to draw the €200,000 between certain dates.

One of the most important things is to make sure that the foreign exchange provider keeps the process simple, the jargon does not help anyone, least of all you. The deals are reasonably simple, so avoid using companies that make the process sound difficult. Find the best rate, and make sure that the currency provider offers you detailed, good and transparent information when purchasing your property for sale in the Canary Islands.