So, you have found the property of your dreams and it's in a far away land where life is slow and every beach could be a postcard. You have been saving for years for this one opportunity and have a sizable lump sum sitting in your bank account just waiting to be converted into bricks and mortar. The only problem is, your money is in England under lock and key and you need to get it to paradise before someone jumps in ahead of you and snatches away your dream home. So what are you going to do? Do you don some dark glasses and whisper to your bank teller that you need your life savings in unmarked non-consecutive bills before placing them in a briefcase, handcuffing it to your arm and jumping on the first plane to your new home? Well, you could do that, but apart from looking a bit suspicious you would be taking a big risk carrying that kind of money in cash.
 
Another, more secure option, could be to arrange a transfer via your bank. But, as beautiful as your new country is, do you trust the stability of its currency enough to know you will get the best exchange rates for your money? After all, when you are changing enough money to buy a house a few points up or down on the rate could mean a difference of thousands of pounds. The third and undoubtedly most sensible option is to use one of the increasing number of foreign exchange specialists out there who are lining up to help you shift your money in a safe way at a safe time. But you will want to be sure you take the best option.

MAKING A CHOICE
So, how do you choose the best foreign exchange firm for your circumstances in what is a rapidly growing market? According to Rajesh Agrawal, managing director of RationalFX, the golden rule when choosing a foreign currency exchange company is to make sure that they are professional and experienced. "An experienced team should be able to answer your questions confidently and promptly. While most of the foreign currency exchange companies are not authorised to advise, the good ones will have a 'consulting approach'. They will listen to you carefully, understand your requirements and then carefully explain the various options available to you in plain English." Jennifer Saunders, head of private clients at AFEX, agrees that experience is an important factor when making your choice. She says, "Confidence comes over time. I personally would feel more confident dealing with a company that has been trading for 20 years as opposed to to one that has only been trading for one or two. You shouldn't feel pressurised and everything should be explained so that you completely understand and feel confident with the company you are dealing with." Sonia Fernandes, account executive at Moneycorp, stresses the importance of researching the companies you approach. "Do they offer open access to their company information, for example on their website, such as their annual report? Do they have a good credit rating?" Fernandes also advises consumers to check that a company has been ISO accredited, meaning that their procedures and systems have been audited by an external auditor. Alex Wright of HIFX thinks customers should watch out for brokers who 'quote you silly'. "It is futile to shop around comparing the best foreign exchange rates unless you have registered with all the companies as they are not obliged to honour the deal. The trick is to ask where the interbank rate is, tell them what amount of currency you are looking to buy and then ask what is the broker's profit on the deal. As a guide, anything between 0.5–1 per cent is reasonable. You should then ask if any additional charges are involved", Wright recommends However, Agrawal points out that it is important for you to know that interbank rates are not 'tradable rates' and the broker won't be able to get you that rate. He said, "a few foreign currency exchange specialists might quote you unrealistic exchange rates, just to get you registered then tell you that the market has 'dropped' and now they can't get that rate anymore. You can check the interbank rates on the internet on several websites for an indication of what to expect."

EXCHANGING TO BUY PROPERTY
When you decide to buy a house abroad, it is likely that you will agree the price in the local currency. According to Saunders, at this point it is good idea to have an accurate idea of what level the market is trading at. "A property priced at 250,000 euros may be advertised as costing £165,000 based on a rate of over 1.51 but in reality could be nearer £170,000 based on a rate of 1.47. In the past 12 months we have seen the interbank rate fluctuate from lows of 1.40 to over 1.51. On a 250,000 euro exchange that could mean a difference of over £13,000", she advises. Other hidden factors to watch for are the charges that foreign banks make to receive money into their bank, which can be quite costly. A good foreign currency exchange firm may be able to put you in touch with a bank that will reduce or eliminate these fees.

Planning is of vital importance before and after buying a property abroad. Saunders thinks that even after you have bought your property you need to have thought about the ongoing costs. "You may have a mortgage to pay on the property or you may have bills and charges to pay on an annual basis. Most currency exchange companies can also transfer these over at the commercial rate. However, it is important to be careful when fixing rates for a particular length of time for regular payments because some companies have been known to fix them at tourist rates when booking a rate each month is usually cheaper."

YOUR OPTIONS
A fixed rate is only one of a number of different ways to exchange your money. There are a range of services offered by foreign currency exchange firms designed to suit different needs and preferences. The different types include a spot deal, a forward deal, a limit order, a stop loss and a regular payment plan (RPP). Saunders lists the options as:
1) Spot deal – You fix the current rate and pay for the currency in full within two working days.
2) Forward buying – You can fix a rate for up to 12 months in advance (sometimes longer). You pay a deposit of five-to-ten per cent and then the balance on the maturity date.
3) Limit order – you specify a rate you want to achieve, if it hits that rate your broker can buy if before contacting you.
4) Stop loss – you can put a bottom level figure on your order so if the market was to drop, you can buy before it goes too low. These two orders can be placed in unison with each other, giving you a range to buy within. For example, you may want to buy at 1.50 and can't afford to get less than 1.45.
5) Regular Payment Plan (RPP) – this enables you to set up a standing order and have smaller more regular amounts transferred over at the commercial rate. You may want your pension transferred, or mortgage payments, rental income, etc.

Christina Weisz of HIFX says you should not expose all of your assets to the highly unpredictable market at once. "In order to avoid disappointment, we strongly suggest you employ a 'percentage' strategy when buying your foreign currency." She suggests buying currency in several chunks. "This way you are able to work out an average exchange rate for the total amount transferred abroad; this will spread your risk. The key is to ensure that you buy a significant portion straight away otherwise you are not addressing this risk". Agrawal says it is important for people to know that their main objective is to get the best foreign exchange rates for their property purchase, and not get caught up in 'gambling' on the market. "When making the final decision to purchase the property at a certain price, you must have calculated that price in sterling using the exchange rate at that time. Just keep those exchange rates in mind and try and get as close (better or worse, depending on the market) as possible to that." So, the moral of this story to find the best exchange rates is to find an expert you trust and then don't let the 'gambling instinct' take over. If you do, you could end up gambling away that dream house. 

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For further information about the best exchange rate:
Associated Foreign Exchange Ltd 
Rational FX
HIFX
Moneycorp

Article first published in February 2006