Here we explain the best way to send money to your new country of residence.
If you’ve been considering moving overseas, sterling’s fall since June 2016 might have served to dampen some of your enthusiasm – especially if you are selling up and buying a home in another country. However, we shouldn’t look at currency rates in isolation. A lot depends on where and when you buy and it is important to compare your financial situation with that in the country that you are looking to move to.
For example, the combination of high UK house prices and less buoyant international markets could outweigh the recent falls in sterling if we look at things from a historical perspective. Until recently Spanish house prices had been on the fall for around seven years, and the cost of a square metre in Andalucia is now around €1,125 – that’s £150,000 for a 150m2 property, even taking today’s sterling exchange rate into account.
In many parts of the UK, this budget would not stretch far at all. If you are moving abroad though, there are some things related to exchange rates that you should be aware of.
The costs to watch out for if you are sending money abroad
If you are moving abroad, the chances are that you will retain some financial interests back in the UK. You might need to transfer money from the UK to your new place of residence for example – say a rental income from a UK property, or even your regular pension income.
Sending money across borders opens up your finances to foreign exchange rates, and this comes with a number of risks associated with the cost of sending money abroad. Firstly, there is the real risk that exchange rates could move against you. It is by no means unusual that rates can move sharply in a matter of days or hours: we all remember the fate of sterling as the vote to leave the EU came into focus, and it lost around 10pc against the US dollar in just hours – falling even further in the following months.
Between June 23 and July 8, the same property costing US$300,000 could have cost you £23,000 extra, simply because of the fall in the pound’s value. The other less obvious risk of paying too much though is the exchange rates on offer by individual providers. Uncompetitive rates could end up costing you up to 4pc more when you send money abroad.* Again, if we think about the impact this could have on a property purchase – where a large amount of money is changing hands – then this could add up to an extra £7,000 onto the cost of the property mentioned in the example above.
What can you do to manage exchange rate risk?
Using a currency specialist can help you manage some of these risks, so we’ve teamed with foreign exchange specialist moneycorp to bring our readers Telegraph International Money Transfers.
Send money abroad cheaply
The service provides readers with access to exchange rates that are typically up to 4pc more competitive than you would receive from a high-street bank.* The transfer fees are typically much cheaper too, and while banks can charge between £20 and £40 every time you make an international payment, moneycorp’s online transfer fee starts at £4 and goes up to a maximum of £10 if you make a telephone transfer.
Save on regular money transfers
The service can also take away the hassle when making more regular transfers, by using moneycorp’s Regular Payment Plan. You are able to set up repeat payments at any interval much like a direct debit, whether weekly, monthly, or quarterly, taking the hassle out of remembering to make your payments.
As for managing currency market fluctuations, each reader gets a dedicated personal account manager who can provide guidance on either the transfer itself, or any questions you have around the currency markets and their ups and downs. You will have the option to fix a rate for up to two years using what is commonly known as a ‘forward contract’ (this may require a deposit).
You might want to wait and see if a more favourable rate becomes available before you commit. In this case you could set up what is known as a ‘market order’, whereby if a rate that you are happy with is reached then moneycorp automatically books a deal on your behalf. This service also offers peace of mind asallclients’ funds are safeguarded in segregated client bank accounts. So it might be time to join more than 10,000 other Telegraph readers who use this service.