Transferring money overseas – the safe way

When transferring money overseas, I recommend you use a regulated currency broker.

This will give you security and peace of mind as well as a much better exchange rate than other providers, such as banks. Currency brokers also offer a wider range of options to suit your circumstances, depending on whether you’re looking to make a one-off payment or a series of regular ones.

When might you need a service like this?

You won’t usually need to transfer large sums of money for regular travels. But there are circumstances when you might need more than just travel money. Perhaps you’re going to live and work abroad for a year or two and need some start-up funds. Or maybe you see the villa of your dreams, like the one in Cannes pictured above – how many of us have done that! TV programmes like ‘House hunters international’ and ‘A place in the sun’ feature people who decide to take action and fulfil that dream.

Sometimes, a full-scale relocation is the objective. A traveller discovers a country they love, and feels instinctively that they want to change their life and move there. Some great books and films on this theme include Under the Tuscan sun and Driving over lemons (see my separate post on Four classic British travel books on Spain for more information on the latter).

It happened to me. I went to New Zealand in 2000, intending to stay for 6 months. 8 years later, I was still there. I’d fallen in love with the country, and with a New Zealander – and bought a house! My flat back home in the UK was rented out. So I’ll tell you about my experience of buying a home overseas, and managing the money side of it.

Buying a home abroad

There’s a lot to learn when buying a home overseas. You need to check all the legal aspects of ownership and inheritance, residency requirements, taxes, mortgages, surveys and so on – and every country does things differently. If you’re buying a holiday home which you plan to rent out to other holidaymakers, there’s even more legal stuff to check out, because some authorities require that you seek permission or apply for a tourist licence before they will allow you to do so.

A place in the sun web site has some good general guides to buying property in Europe, Malta, Turkey, Australia and Florida. It’s aimed at a UK readership, but the country information is very useful and a good place to start.

My situation was a little different in that I was already living and working in the country I wanted to buy in, so I already had a bank account, tax ID, credit rating and knowledge of how the housing market worked. The tricky part for me was in getting the money together for my share of the deposit on our house. I decided to look at re-financing my UK flat, which had lots of equity in it, to release some money for the deposit. At the time, the UK pound – NZ dollar exchange rate was good. A lot better than it is now!

I used a UK-based mortgage broker to help me with the re-financing, because not all UK banks would lend to an overseas-based borrower, even if they were a UK citizen. The broker found me a good deal, and the re-financing all went through smoothly. When the time came to transfer my pounds, I did look at using my UK bank, but soon realised that their fees and exchange rate were not competitive. So I used a broker, which worked really well. Since then, I’ve made further transfers for one-off projects. The UK broker I use is Currency Index*.

Why I use Currency Index

There are many currency brokers to choose from. I found Currency Index* through A place in the sun magazine. This is the partner magazine to the popular UK television series of the same name, which has been running for 19 years and is a trusted brand. I figured that a company endorsed by A place in the sun had to be worth looking at. Here are some more reasons why I went with Currency Index*:

• They’re regulated by the UK Financial Conduct Authority (FCA), which means that they’re an authorised payment institution and they adhere to strict standards of practice and compliance. They operate safeguarded bank accounts, in which customers’ money is held until the transaction goes through. This makes it less likely that customers would lose their money if the worst case scenario happened and Currency Index* went out of business.
• They’ve been in business since 2008, a long enough time period to establish credibility. In that time they’ve received many 5-star testimonials from satisfied customers as well as industry awards.
• I was confident that their processes and payment mechanisms were secure – very important when you’re transferring large sums of money!
• I was given my own named currency adviser, who I could speak to about my personal requirements.
• They offered good exchange rates (I shopped around to compare).
• They were open and transparent about their fees – which were low and were only charged when I went ahead with a transaction. The initial consultation and advice were free.

I’ve used Currency Index* a couple of times now, and have been very happy with their service. Whichever agencies you decide to look at, I hope that the above criteria will help you evaluate them and make an informed choice.

What about currency fluctuations?

We are living in uncertain times, with political upheaval around the world causing volatility in the financial markets. For travellers, exchange rates can have quite an impact on our budgets, sometimes bad and sometimes good! Imagine the impact when you’re transferring a large sum of money to buy a home. It can affect the price you pay by tens of thousands of pounds, euros or dollars. Another reason to use a currency broker is that they can help you manage this volatility.

If you know that you will need to transfer money around a specific date, say in 3 months’ time, you can use a Forward Contract to lock in an exchange rate for up to 2 years, depending on what your agency offers. You can also use Stop Loss and Limit Orders.

If you can afford to wait for a period of time before making your transaction and you have reason to believe that rates might improve to a certain level, you can use a Limit Order to automatically buy your currency when it reaches that level. Or if you think that rates might fall, you can use a Stop Loss to buy automatically when they reach the lowest price you’re comfortable with, to make sure you don’t lose out further.

Your broker will advise you as to what is the best way to manage your transaction, depending on your circumstances and the amount you are transferring.

A word about fees

I mentioned above that I like Currency Index* because they are transparent about fees. Some brokers claim that they don’t charge fees. I did once use such a broker. They did not charge me a fee as such, but their intermediary bank did! The intermediary is a financial institution in the target country or nearby (in my case, it was an Australian bank) which facilitates the exchange. I was not given any warning about this fee until I realised that the amount of New Zealand dollars I received was less than the currency broker had agreed with me.

When I demanded to know where the money had gone, they denied all knowledge. I contacted my New Zealand bank, who said they had not deducted the money. So I went back to the broker, who investigated further and then admitted that their intermediary in Australia had charged the fee. They apologised and said it shouldn’t have happened. But I was not impressed, and did not use them again.

It is usual for your receiving bank to charge a fee for receiving foreign money. They should state clearly on their web site what this charge will be, so check it out in advance – it should be under the section about foreign transactions. It’s nothing to do with your broker, so don’t give them grief about it! It just pays to be aware in advance of what fees you are going to be charged on both sides of the transaction (and in the middle of it, if applicable – see my comment above about intermediaries) so that you don’t get any unpleasant surprises.

Money laundering checks

Expect to have to provide your broker with ID and information about the purpose of your transaction, as they are obliged to make checks on you to ensure that you’re not engaging in any illegal activity. It’s nothing personal – it’s the law.

Timing is everything

If I can add one last piece of advice, it’s that you should do your homework as soon as you know you have a requirement to transfer money. The sooner you get started, the better. Do your research, choose your agent, and discuss your requirements with them. Do not leave it until the last minute to organise your currency, especially if you are buying a house! Time is definitely money in this scenario. If you manage things well, you can save yourself a small fortune. Good luck!

If anyone has questions about buying a house in New Zealand, I’d be happy to help if I can.

Disclaimer: I am not a qualified finance expert, broker, accountant or property professional. The above article is based on my own experience and offered as general guidance and opinion. Please do not rely on it for your decision-making – make sure you consult appropriate professionals.

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