Protection against currency changes

This topic contains 1 reply, has 2 voices, and was last updated by  Chris Nation 1 year, 5 months ago.

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  • #193652

    Finister1
    Participant

    I am looking to purchase a property with a mix of £100k cash and  £75k mortgage. I am from the  UK and  so is the  vendor.  I wondered if there was a way in which I could agree to pay the cash element  in sterling, agree a  rate with the vendor for the cash element now,then  convert  this to euros, leaving a balance to pay in euros on the actual rate at completion. This would mean we both at least knew that the £100k was at a pre agreed rate and only the balance would be at the risk of currency rate changes in the future

    I am  not sure if this is feasible but we would not be  exchanging contracts for 4 months  so I am reluctant  to gamble on the currency variances on the entire £175k sum  if I can  avoid it legally

    Any  advice welcome

  • #193660

    Chris Nation
    Participant

    Hmm…. how does the vendor feel about this? Friends of mine bought in France at GBP1 = FF12 and sold at FF8 = 1GBP. The last thing they would have agreed to was the opportunity to give away a stonking great gain on FX at a time when GBP was dodging about at the bottom of the curve.

    Both parties are going to have to ‘take a view’ (I love this phrase. It covers everything from a carefully considered analysis, with stats and evidence, to a wild, panic-stricken punt) on the way GBP <> € might go over the next 4 months. And week may be along time in politics but 4 months is an eternity in fx.

    If I was in the vendor’s shoes I think I’d ….. No. It’s no good. I can’t even think what I’d do in his place, me with nothing to lose but looking a fool. Except – if you are the only game in town …

     

     

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