E&V London A4 - Flipbook - Page 74
E n g E l & Vö l k E r s | lO n D O n
Money transfer
cornerstone is innovating through partnerships and expanding its payment capabilities allowing customers
to send more currencies to more countries in real time.
Thinking currency when buying property overseas?
When buying property in a different country, currency exchange plays an important role. Movements in global markets can
pose a significant risk and it’s important to be aware that there are strategies that can be put into place to help minimise risk.
acting promptly and decisively is the most effective approach to navigate the volatility of exchange rates.
Why should you lock in an exchange rate?
locking in an exchange rate can help you when you buy or sell property. as an example of how changes in foreign exchange
rates can affect you, if you bought a £1,000,000 property as an EU resident with funds in Euros in July 2023 it would cost you
over £17,500 more than if you had done the fX transfer just a few weeks earlier. As you finalised the smaller details of the sale,
the cost of the purchase would proportionally increase as the euro decreased in value compared to the pound. locking in the
rate at the point of sale without impacting your cash flow would protect you against adverse changes of this nature. it would
also allow for future planning with greater clarity.
What is a Vanilla Forward Contract and when should it be utilised?
An effective strategy for managing foreign exchange risk is to utilise a ‘Vanilla forward Contract’, also known as a forward
contract. this contract enables you to secure a future exchange rate, safeguarding you against significant fluctuations in
foreign exchange rates. to illustrate, if you were financing a property purchase with cash, you would execute a forward
contract at the time of signing the property contract. You can select a value date that aligns with the sales cycle of your
property purchase, typically lasting around six months. Within this chosen duration, you can make payments at the agreed
fixed rate without the need to settle the contract upfront. at each cost milestone, such as paying the deposit, you can
conveniently employ your forward contract. You provide your provider with the corresponding amount in your own currency,
which will be converted into the required foreign currency using the predetermined exchange rate. the foreign currency can
be delivered to you for direct property payments or to a third party on your behalf. through a forward contract, you can
purchase the necessary currency for a specific future date and gradually settle the contract, either partially or in full, during
that time. this approach offers buyers flexibility and security by guaranteeing a specific protected rate, regardless of market
fluctuations.
About Cornerstone FS PLC?
Cornerstone is an AIM listed E-Money Institution providing Currency Exchange & Payment services to both private clients
and businesses globally. Authorised and regulated by the Financial Conduct Authority with a proven track record of
delivering excellent services to our clients and are wholly committed to providing the best-in-class experience and
guidance.
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