Buying property abroad is becoming increasingly popular, especially among Brits. In fact, with as many as 400 Brits choosing to move abroad every day according to this article from The Telegraph, thousands of British citizens are searching for and buying properties abroad every year, and it’s certainly a complicated process. Not only do you have to actually find and view the properties (which can often mean travelling in and out of the country on a regular basis), you also have to deal with paperwork, language barriers, exchange rate fluctuations and a whole multitude of other problems. It isn’t just people looking to emigrate that buy properties overseas either, many seek properties outside the country as investment properties, often hoping to “sit” on their investments for many years as property prices in the area rise, at which point, the property can be sold for a healthy profit. What’s more, in some locations, it’s also possible to rent overseas properties out as holiday lets and earn an additional annual income. Depending on the value and feature-set of your property, this can often bring in upwards of £10k per annum in holiday-let income.
However, although your financial situation may improve greatly once you’ve actually purchased your overseas property, the financial costs associated with actually purchasing an overseas property can be extremely high due to transfer fee costs, exchange rate fluctuations and so forth. So how do you ensure you pay as little possible on your currency exchange fees and make buying an overseas property as low-cost as possible?
THE USUAL STEPS TO TAKE WHEN BUYING AN OVERSEAS PROPERTY
Obviously, the first part of the process is to actually decide where you’d like to purchase a property. This can be a tough decision as there are many beautiful locations around the world, but when you’re contemplating purchasing a property for investment purchases, there are a few areas that are likely to stand out. According to this article from RightMove.co.uk, Spain, USA, France, Greece and Italy are all top of the list when considering a location for an investment property. It’s easy to see why too, as most (if not all) of these locations have great all-year-round weather and favourable economic conditions (Greece, in particular). The second part of the process is to actually begin trying to find a property to purchase. As you’re unable to simply walk into an estate agent to find an overseas property, this search will most likely begin online for most people.
There are many great websites to find a property such as RightMove.co.uk (they have a dedicated overseas property section here), Zoopla (also with an overseas section here), HomesOverseas.co.uk and many others. While there are typically many photos and a wordy description present for each overseas property listing, viewing the house in person will obviously require a trip abroad, so it makes sense to ensure that a property is a) what you’re truly looking for in an investment property (or holiday home), and b) within your price range. Once you have decided on a property and wish the make the purchase, things can get quite complicated. This is the part where you have to start dealing with legal paperwork, language barriers and currency exchange, amongst other things.
While this can be a complicated process, much of the headache can be avoided by working with a lawyer (as overseas property laws are often different to UK or US property laws), a translator (for the paperwork, at least), and making sure to do your homework regarding any hidden/additional fees before purchasing. Once all of the paperwork is in order, it’s time to make the money transfer for your investment property. This can often be the most complicated and costly part of all and if you don’t do your homework, you could end up paying thousands in excess fees.
HOW TO SAVE ON EXCHANGE RATES AND TRANSFER FEES
When you’re transferring the payment for your overseas property, there are a lot of options to choose from in the form of many international money exchange companies. So how do you choose the right company? Well, the quickest, easiest and most practical way to do so, and ensure that you don’t pay a penny more than you have to, is to use an online currency exchange comparison tool (such as the one at SendThatCash.com). Tools like this allow you to quickly and easily compare multiple companies and see which offers the best deal for the amount of money you wish to transfer. For example, let’s assume that you’re looking to purchase a property in the USA for $150,000.
By using the currency converter at SendThatCash.com, you can see that when converted into pounds (GBP), this equals £98,378.91 at the current exchange rate. As we know we’re going to encounter a fee of some sort during the currency exchange, let’s send £99,000 to be safe. Next, we simply plug this number into the money exchange comparison tool at SendThatCash.com to compare all of the various options.
The comparison gives a total of 15 results. As you can see, the fees (and therefore total amount received at the other end) vary significantly, differing by almost $1,000 in the first three results alone. Across the entire list of results, the “amount received” varies by almost $4,000 in some examples; over 2.5% of the total investment property cost. Clearly, by using this an online international money exchange comparison tool such as this one, you can save a significant amount of money.
WARNING: A QUICK WORD ON EXCHANGE RATES
Exchange rates between currencies (e.g. GBP and USD) vary on a daily basis. Although this is typically only by a small fraction, this variation can often be costly when transferring large sums of money. Therefore, it makes sense to transfer your money at a time when the exchange rate is favourable to you. As an example, let’s look at how things would differ in our example above (the $150,000 house) on two separate dates just a few weeks apart. Equivalent value $150,000 (USD) in pounds (GBP) on:
10th December 2014: £95,263.50.
5th January 2015: £98,550.00.
That’s over a £3,000 difference in just a few weeks. So, when you’re looking to transfer money for your property, keep an eye on the exchange rate and if possible, transfer it at a time favourable to you. You can view accurate current and historical exchange rates on XE.com to do this. Plus, you can use the currency converter tool at SendThatCash.com to check the equivalent value of one currency against another for a particular amount (i.e. the cost of your investment property) at any time.