I’m buying a off-plan property. How can HiFX help?
When buying overseas property, you’ll have to make one or more international money transfers to complete the purchase.
The issue needs serious planning especially if you are buying a new development off-plan where you will be required to make a number of ‘stage payments’ during the construction of your property.
For illustration purposes let’s assume that you’re an Australian resident buying a holiday home in New Zealand.
The developer will require an up-front deposit in NZD and then further stage payments during construction over the next 12 months, with a final payment upon completion.
While you will know the price of the property in NZD, the actual cost in AUD will be determined by the exchange rate you obtain. If the AUD strengthens the cost will decline, but if the AUD weakens, then your costs will increase – i.e. a weaker AUD means your property investment will be more expensive. Whatever the type of property, you won’t know the final cost until you have secured an exchange rate.
Whether you’re buying in New Zealand, Florida, Dubai or any other country the principles are the same.
To remove this risk, many of our clients buy a forward contract. This is essentially a buy now, pay later option, allowing you to lock into an exchange rate, even if you don’t have all the funds available. Should the rate get worse, you will not be affected. Alternatively you may wish to secure an Exchange Rate Guarantee, providing you with a guaranteed exchange rate, and the flexibility to take advantage of favourable currency movements in the future.
If however you have access to all of the funds from the start and want to convert them immediately, you can enter into a spot contract. Unlike a forward contract this is a buy now, pay now option, and you will need to arrange immediate payment for the full value of the currency bought or sold to HiFX.