Potential Brexit effect on Your finances

As June 23rd approaches what could a Brexit do to your finances?

Concerns about a Brexit continue to be in the news but apart from the initial reaction from the currency markets the exchange rates have levelled off and there is very little movement at the moment, but what effect could this have on British property buyers and British expats in France?

The pound fell considerably since David Cameron announced his reform deal for UK membership in February and by the end of the month, the GBP/EUR currency pair was stuttering at a 16-month low.

Market volatility is likely to gain pace and this can have a considerable impact on UK expats trying to sell.

Would 'Brexit' affect my French property purchase?

There are two key factors which could affect your ability to afford a home in France:

Interest rates and mortgage availability.

1. Interest rates

It is unlikely the Bank of England would want to increase interest rates if the UK was suffering adverse effects because of a Brexit.

Low borrowing costs make mortgages more affordable, which in turn may make it easier to sell your UK home in order to fund your move to France or further afield.

2. Mortgages

The banks are likely to be more cautious with their lending. Banks may tighten their lending requirements and reject more mortgage applications than previously, this would mean that you may struggle to get finance, even if, you have a strong credit rating.

Talk to Tim Durkin at Stag Mortgages about your UK mortgage or re-mortgage plans.

Alternatively you were looking to secure a mortgage in France, you could find yourself subject to very strict lending requirements because the UK would be outside the EU so this means more paperwork and more hoops to jump through. When applying for borrowing in France your debts cannot total more than a "third of your income" which could become problematic if the Pound continues to weaken and you find your Pounds and pence are suddenly worth fewer euros than they were before.

Thinking of applying for a French mortgage then talk to Jonathan Woodcock at LCF Mortgages.

Could 'Brexit' affect how we send money to France?

Indeed a Brexit could change the regulations regarding overseas transfers. If Britain were to leave the EU, there wouldn’t necessarily be an agreement in place between UK and French banks and this would need to be re-written. This means that you would be charged by your destination bank, with no overall regulation regarding the amount that they can charge to receive euros.

Banks will always want to take your money rather than offer the service, only my opinion though! after a lifetime of poor service from most banks.

What affect could a Brexit have on sterling?

As stated at the start of this article the pound has already fallen in value considerably. As of early March, sterling had dropped by over 7% against the euro since the beginning of 2016 following 'Brexit' fears.

Lets put that into hard cash terms, £100,000 transferred at the beginning of January 2016 would have given you 136,460 Euros, but the same amount at the end of February 2016 would be 126,150 Euros. So over the course of 2 months your £100,000 would have dropped in value by €10,310.

Many of the European banks have already released their forecasts on the impact of a Brexit, these vary between a drop in the value of Sterling of between 14% to 20%.

Could £1.00 Equal 1.00 Euro with a Brexit?

Some Banks even predict parity with the euro in the short term, meaning £100,000 would only be worth 100,000 Euros making French property a lot more expensive for you.

Can I protect against Currency Fluctuations?

YES with a Forward Contract:

This service is available through most reputable currency exchange providers that enable you to 'fix a favourable change rate' for up to two years.

This is particularly useful for property buyers as it means you will always know exactly how much you’ll get for your money and can budget effectively and feel safe knowing you will be able to afford the house as there will be no change in your money from making the offer to having pay the balance.

Feel free to contact our currency partner Ben Amrany from FC Exchange follow this link

Call us to discuss things like the amount of money you are looking to exchange and the time frames you have to work within. We can look into rates for you which can be used to calculate the exact sums of both currencies involved – you’ll know exactly what you’re getting.

If you want to go ahead, we will agree the exchange rate at which your money will be transferred in the future. You will send us a deposit (this is not an extra cost; it’s deducted from the balance you pay in the future). Then, when the transaction reaches the ‘settlement date’, you pay us the balance at the pre-agreed rate. All you need to do then is tell us where to send your money.

Forward contracts can be ideal if you don’t need to make a payment immediately but you can’t afford for the exchange rate to be moving wildly. If, for example, you’ve agreed to buy or sell a house overseas, but the completion date is a few weeks or months away, a Forward contract lets you guarantee the exchange rate, so you know exactly what the house will cost on completion day.

Do you want more information ?

So if you need to buy or sell sterling and would like to be kept up to date with all the latest data releases and exchange rate movements then feel free to contact myself Ben Amrany. If you are buying or selling a house in France we will make sure your monies are in the right place at the right time, we work hand in hand with you and Cle France.

For more information on the currency service I can provide please feel free to contact myself...

Ben Amrany from FC Exchange follow this link or phone and ask for myself and quote "Cle France" on 020 7989 0000.

You may contact me directly using this form (click here) with your requirement and I will explain the options that are available to you in getting the best exchange rate.