Buying a House Abroad - Should I exchange my money before the Budget ?

GDB2222

Leodogger said:

BikingBud said:

Leodogger said:

BikingBud said:

Leodogger said:

Albermarle said:

If the markets were thinking that the Budget would affect the Pound, it would already have moved by now as markets do not wait for things to happen , they pre empt them.
However if she does something unexpected ( ala Liz Truss) then all bets are off. However the Chancellor will be acutely aware of the risks involved so it would be very surprising to see anything like that happen. Remember bond markets like tax increases and spending cuts, as it balances the books better.

You could be right but I would feel more reassured if I could find a currency house that will lock in a rate around the 1.20 area.   I am thinking perhaps a forward contract is needed as our purchase could take 4-8wks and we can't afford for the rate to tumble by even a couple of cents which would make as much as 3000 euros price difference to our purchase price.

If you can't afford the change are you overreaching?

There will always be issues with trying to time exchange rates and when also trying to time property purchase the compound effect of variables may be neutral, work for or work against you. How much are you "losing" by not currently getting the best possible UK interest return?

If you are buying the property for the rest of your life how does the ~€3000 work out as a daily rate? A bottle of beer? A bottle of wine? Consider the benefits over time rather than the apparent immediate costs.

Or if that is not tolerable then perhaps a more risk tolerant purchase, with more headroom to accommodate ~ €3000 variance might be more appropriate. 

It's not a matter that we can't afford the 3000 euros either way, but like most people we want to maximise our investment.   After all no one voluntarily would hand over 3000 euros for nothing if they can avoid it.   This is our last house move as we are in our mid 70's but it makes sense to take care of what savings we have as they can't be replaced once gone now !

You said you can't afford! 

That is very different to I would prefer not to!

So consider wine value 3000/52/10 is perhaps about €5.80 per week

Can anyone afford to throw away 3000 euros?

Nobody here can tell you whether the budget will make much difference to the exchange rate. The market has already factored in all the publicly available information, and the current exchange rate reflects that. All the hedge fund managers, who may have a bit of an edge on the market, are keeping the information to themselves. 

If you would be badly hurt by the Pound dropping, I think you should exchange most or all of your money now. That would, obviously, mean you would miss out if the Pound rises, though. 

saajan_12

Leodogger said:

BikingBud said:

Leodogger said:

Albermarle said:

If the markets were thinking that the Budget would affect the Pound, it would already have moved by now as markets do not wait for things to happen , they pre empt them.
However if she does something unexpected ( ala Liz Truss) then all bets are off. However the Chancellor will be acutely aware of the risks involved so it would be very surprising to see anything like that happen. Remember bond markets like tax increases and spending cuts, as it balances the books better.

You could be right but I would feel more reassured if I could find a currency house that will lock in a rate around the 1.20 area.   I am thinking perhaps a forward contract is needed as our purchase could take 4-8wks and we can't afford for the rate to tumble by even a couple of cents which would make as much as 3000 euros price difference to our purchase price.

If you can't afford the change are you overreaching?

There will always be issues with trying to time exchange rates and when also trying to time property purchase the compound effect of variables may be neutral, work for or work against you. How much are you "losing" by not currently getting the best possible UK interest return?

If you are buying the property for the rest of your life how does the ~€3000 work out as a daily rate? A bottle of beer? A bottle of wine? Consider the benefits over time rather than the apparent immediate costs.

Or if that is not tolerable then perhaps a more risk tolerant purchase, with more headroom to accommodate ~ €3000 variance might be more appropriate. 

It's not a matter that we can't afford the 3000 euros either way, but like most people we want to maximise our investment.   After all no one voluntarily would hand over 3000 euros for nothing if they can avoid it.   This is our last house move as we are in our mid 70's but it makes sense to take care of what savings we have as they can't be replaced once gone now !

But you're not necessarily throwing it away.. FX rates can move up or down, and 1-2 cents isn't even an abnormal move in the space of weeks or months. The budget isn't a particular reason to expect it'll be down, given all your suspicions are anticipated by market traders who price those into the GBPEUR level. 
Most wouldn't want to give up EUR 3000 profit for nothing either, which is equally likely.

So it really becomes a case of affording - if GBP going down will make or break your purchase then I'd protect against that, even at the cost of any potential profit. If its still affordable then I'd leave it, as the FX rate could go up or down so you may as well save on any additional transfer / bank fees. 

Re interest, what bank are you with? A high interest savings account within the same bank should be quick to transfer any amount between your own personal accounts. In a month you could earn nearly £1000 in a month on a £250k sum, which goes a decent way to maximise your investment wihtout the potential loss. 

BikingBud

@Leodogger

So what did you do?

How much worry did you put yourself through?

Have you put the cash in a decent savings account yet?

Leodogger

We have left the money in our N, S and I savings account earning interest as we decided to withdraw the offer from the house we were going to buy !

Leodogger

BikingBud said:

Still not sure why you consider it throwing money away.

You have decided to invest in moving to Spain. Would you be worrying about trying to time the exchange rate if there was not an imminent forthcoming budget?

Have you got the funds from the sale in a high interest savings account yet? If not how much has that cost you in lost interest?

Bear in mind as a couple you are likely to have an extra £920 ayear from Apr 25 and will likely retain the same future indexation as the UK pension recipients.

Perhaps if you had a Spanish bank account then it might be easier or are you worried that the funds will get taxed?

Control what you can, the markets will vary, if you luck in then great, if not then it might cost you a bottle a wine a week over 10 years. If that will ruin your life then you have greater worries.

We withdrew our offer from the house we were going to buy and instead left the money in an N, S and I Direct Saver account.   We have attempted to open a bank account online (as they won't do it in the branch) and their web site was not working so now we have to go back to the branch to try to get them to help us !!