Saving thousands when buying abroad
Life in Italy
Securing Costs from the Exchange Rate
When buying property in Italy, it is very important to pay attention to the exchange rate, or it could cost you a lot of money. The fact is that many Americans will simply use the exchange rate offered by their personal bank for the payments on their property. The bank's 'retail' rate of exchange is usually a few percent worse than the market rate. The bank may also charge wire transfer fees, commissions, and bank receiving fees. Since the bank takes a large profit that is built into the exchange rate, many individuals don't realize they are leaving money on the table. The truth is that there is an alternative to using your bank that could save you significant sums of money.
Working with a 'specialist currency broker' can not only save you time and hassle, it can also save you money. Their focus is to educate clients on the currency market, secure a better exchange rate than the banks, and transfer funds free of charge. Because the exchange rate that currency brokers can offer is much better than the bank's rate, you will save money (usually 1%-4% of the amount) which on larger transfers can turn into thousands of dollars. Their services are designed to make the currency aspect of an international property purchase as simple, secure, and cost effective as possible.
Some currency brokers can also protect you from adverse movements in the exchange rate, which is useful when you need to make payments a couple of months to a couple of years in the future.
For example, an Italian property priced at EUR 250,000 would have cost $312,075 in mid October, 2006. Only two months later, by early December 2006, that same property would have increased in cost to $334,200 due to a weakening of the US Dollar. The difference works out to be a $22,125 ( 7.28%) increase in cost in less than 2 months! This is a classic example of avoidable currency risk. If the EUR 250,000 had been reserved in October through booking a free 'forward contract' with specialized currency broker, the exchange rate would have been fixed and thus the $22,125 additional cost would have been eliminated.
Whether you are buying property in Italy, relocating, or simply need to make regular payments abroad, it is worth learning more about how you can take advantage of the services that these currency specialists offer. A great currency specialist to use is HiFX, Inc. Their services are free of any fees and there is never any obligation to use their services, even as a registered client. In other words, you can call any of HiFX's global offices and get a quote on the exchange rate and then compare it with your bank to see how much money you would save. Their website is www.hifx.com.
If you are planning to buy property in Italy and would like to speak to a currency specialist, please contact Tom Wight, at (415) 321-6387 or thomas.wight@hifx.com.