Forex forward agreement
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To see our content at its best we recommend upgrading if you wish to continue using IE or using another browser such as Firefox, Safari or Google Chrome. Moving money between currencies means exposing hard-earned cash to the risk of rates moving against you.
And if that happens when you're trying to buy a property, that move could be catastrophic. If you can only just afford to buy a home at the current exchange rate, what are you going to do if the rate moves against you?
However, there is a way to ensure that you can afford to make property transactions even if exchange rates move against you.
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All top currency brokers offer forward contracts that allow you to lock in at today's exchange rate — but not for delivery for up to two years' time. Mark Bodega, of HiFX , says that around per cent of its transactions are forward contracts "because they only really make sense for larger transactions".
What forward contracts offer is peace of mind. It typically takes at least eight weeks to complete a property transaction — if you know that over that time you won't be hit by moving rates, then you can be sure you'll be able to complete the deal. Top five tips for buying property abroad. Planning ahead will make your big move perfect. Making the big leap and starting a new life overseas.
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Forward contract - Wikipedia
When moving large sums, you're better off with a currency broker. With a forward contract, you usually pay a deposit of around 10 per cent upfront and pay the rest when the contract matures.
You get today's exchange rate. Richard Brown of Smart Currency Exchange said: If you agree to buy a property, can you really afford to take the risk of what the same property might cost you when you compete from when you agreed to the purchase?
Here's how a forward contract for a property purchase could work.
Charles Murray of FC Exchange explained: And David Kerns of Moneycorp adds that taking out a forward contract now could be a very good idea.
And with the UK property market moving again, this could be the perfect time to buy before prices start to climb.
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Senior Personal Finance Reporter Katie Morley reveals her top tips for saving money on a night out. A married couple looking to buy a home together are worried they will have to pay the 3pc stamp duty surcharge. Accessibility links Skip to article Skip to navigation. Monday 19 June How a currency forward contract offers peace of mind when moving Exchange rates can be a nightmare when shifting large sums of money across currencies. Our finance specialist examines one option that can alleviate the uncertainty.
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