Exchange Rate Crisis? What Exchange Rate Crisis?
The news is terrible at the moment it would seem, with global exchange rates slinking down into depressing gloom. This is bad news for businesses, and for consumers. The dollar seems shaky at the moment, and the Euro seems to be running away from the pound sterling as though it has been frightened off. Certainly investors and businesses are struggling to work out the best deals, and for the global market online, rates seem to be changing so quickly that it’s increasingly important to stay on top of the game.
Our global society now means that we no longer have to consider buying products locally, or even in our own currency. Buying online gives us the opportunity to not only shop around for the best deal, but also for the best currency. Many online traders don’t have their conversion rates from one exchange to another linked to an independent conversion tracker. In these cases, you can often find that by switching currencies, you can get a better deal. I saved fifty pounds by simply buying in the country’s local currency than by buying in my own from an online retailer - it’s not hard to save quite a significant sum.
Buying property, particularly overseas, can be a very great challenge at the best of times, but when you have to juggle the difficulties of getting your head round the exchange rates as well, it becomes a whole different ball game. A deal or price that seems good one day, and allows you to balance the books perfectly well, could look set to fall through just a few weeks further on as a direct result of the exchange rate. Remember, an exchange rate change of just a few pence to the Euro, or vice versa, could end up being the equivalent difference of several thousand pounds in the net price of the property you’re after. Moving quickly isn’t always possible when investing abroad, and so problems like these can be a real headache.
The reason I’m writing this is to point out that the sky may look bleak and grey as far as overseas investment is concerned, but there are silver linings around, and I think I have just found one which looks more like gold! I came across an overseas property investment company that appears to have got stuck back at the beginning of this year when rates were good, but either hasn’t noticed that rates have slumped since then, or simply don’t care Either way - it’s rich pickings for you if you’re into investment overseas. The current rate is 1.26 to the pound, yet the company I’ve seen is offering 1.40 to the pound - an 11% difference! To come across this kind of rate in today’s financial market is well worth a second look in my opinion.
So what difference does this exchange rate really make? It may seem like a few pence, but let’s see how this would really affect you. Let’s imagine you’re looking at buying a nice 200,000 property over in Spain. Taking advantage of an 11% difference in rates would mean you could potentially be making a saving of over 22,000! That’s certainly not a saving to shrug off!
If you’re already experienced in the concept of overseas property investment, or you have done your preliminary research into the possibility, you’ll be aware that it is highly recommended to set an exchange rate to begin with, that is agreed by all parties, so that any calculations can be worked out and don’t start sliding all over the place later on, with inevitably nasty surprises. Locating a company that’s not only willing to do this right from the world go, but to actually back date the exchange rate for you all the way back in time to before the currencies started sliding down the drain in the dank gutters of darkness is well worth considering. Having a currency exchange rate over 11% lower than the actual rate makes the whole concept of moving into warmer climates even warmer!
If the prospect of purchasing a property oversees at a ludicrously helpful exchange rate wasn’t enough, you could also bear in mind the other benefits and advantages that this implies. Clearly we’re all realistic enough to realise that property rates fluctuate, and there is never any guarantee of prices holding, and in the short term they may even dip. This is okay for those who are looking for long term investments, but if you’re looking for a relatively quick sale, you may find the market less than predictable. What is predictable however is that you have a margin for error, or at least a safety margin. By purchasing a house at a highly optimistic rate, even if prices dipped by a few percent, you’re protected by an enormous 11% buffer! There’s nothing to stop you from selling the property on later at the normal rate - just don’t tell anyone the enormous difference between the exchange rate you paid and the one you’re selling at!
For the first time investor, you may be surprised just how different buying overseas property is, and you may have set yourself an initial budget. Once you do a little further research, however, you may well discover that, as a result of varying international laws, traditions, methods and requirements, your budget is shrink wrapped a little too far, and you find the whole project becoming less feasible. By managing to save yourself at least 10,000 simply by using an inflated exchange rate like this, you’ll be able to get back on budget without lifting a finger! Well, perhaps a finger- after all, you’ll have to find the same company I discovered first!
