Top 10 Tips for Buying Overseas Property

Buying property overseas can sometimes be a daunting experience, especially when it comes to the seemingly mundane process of transferring the money. Here are some good tips from the foreign exchange experts at World First to help you plan the process effectively.

1. Look at the costs and then plan your budget.

Look ahead at the known costs and ensure that these costs are covered. Fix these costs using ‘forward contracts’ or ‘currency options’ at the time of setting the budget.

2. Consider using Forward Contracts or Currency Options to build in flexibility.

If you don’t like the idea of buying all your currency on the day, at what’s called the ‘spot rate’, secure some fixed exchange rates in advance with currency products.

3. Be realistic with the exchange rates.

Formulate a worst case scenario in your mind and plan around that, or fix the rate in advance to negate any risks if you prefer.

4. Do research views from a few different sources

to make an informed decision about expected foreign exchange rates. There is no cost to sign up for regular updates from currency specialists.

5. Don’t rely on comments in the press.

Remember that a wild statement about which way a rate is going gets media coverage. Small rate movements don’t make stories.

6. Simple solutions are not always the best.

Instead of simply fixing future payments at a forward rate, use hedging strategies (i.e. currency options) that are tailored to fit your exposure, currency forecast and risk level. This will enable you to protect yourself from adverse rate movements while still benefitting from favourable rate movements. There are experts to assist.

7. Assess your exposure to risk with the help of an expert.

Different foreign exchange transactions carry different levels of risk and you need to be clear on what implications rate moves will have. Discuss the situation with an authorised broker to help you assess the situation.

8. Sometimes the best plan is the one that’s best for cash flow not just for predicted rate moves.

A good foreign exchange provider should take all of your needs into account when assessing which approach to recommend. Any strategy must fit in with your day-to-day cash flow requirements.

9. Mix and match.

Don’t be afraid to use a variety of products in place for various payments. Different products may suit different things, and diversification can help spread risk.

10. Assess your foreign exchange provider.

As you would for any other business before entering into an agreement, carry out the due diligence on your foreign exchange provider. Are they authorised? What is their balance sheet like? Get references from clients that deal with them.