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It’s been an awfully long time since I last posted on the blog, for which I apologise. We’ve been getting used to life back in the UK, and it turns out all that leaves us with precious little time on our hands!
In the new year, I hope to find more time to keep the blog up to date, especially as I have lots of contrasting experiences to share between the UK and Portugal.
In the meantime, I have a guest post for you from Currency Index, which I hope will provide some very helpful information for those of you who ever find you need to move your money “back” to the UK.
When moving back from Portugal to the UK, there is so much to think about that you might miss one of the most important financial aspects – repatriating your Euros to the UK. If you have sold a Portuguese property, you will likely have completion funds either with your Portuguese solicitor, or in your bank account over there. So what is the best way to maximise the Sterling you end up with in the UK?
Even if you have a more modest amount in the bank having rented or are not selling your property, the same principles apply.
The main rule to remember is: don’t transfer your Euros direct to your UK bank.
One sure way to lose money, although you might never know how much, is to ask your notary or your own bank to transfer your Euros back to your Sterling account in the UK. It might seem like the most convenient solution, but it can come with an enormous hidden cost. On receipt of your Euros, your UK bank will automatically convert the funds to sterling for you, but at an unknown and likely very uncompetitive exchange rate. In fact, the rate applied by your bank might be as much as 4% worse than the rates offered by specialist currency brokers – meaning you could lose around £6,000 on a transfer of €200,000 back to the UK for example.
It’s a trap that many people fall in to, but with a little planning, following these tips you can make sure it’s avoided.
1. Do some research and speak to an expert
Have a chat with a couple of currency brokers, as well as your bank, and see what sort of rates are on offer. While you won’t want to secure an exchange rate before you know how much you are moving back to the UK and when, it will give you an idea of the market. Many people still assume that their bank’s exchange rate is just ‘the rate’ – but the reality is that currency prices, like any financial transaction, can vary hugely between providers. Why pay your bank a premium for the same product and a worse service than you can get elsewhere?
2. Make arrangements before you leave Portugal
Once you have departed the sunny climes of the Algarve, Silver Coast or your city abode, it is much harder to control your Portuguese finances from the UK. Banks can be unhelpful, lawyers can be obstructive, and you can end up losing a small fortune. Worse still, you may have to hop on a plane back to Portugal in order to authorise your transfer. It’s absolutely crucial to make sure you agree and instruct your chosen method of money transfer before you leave Portugal, while you can sign forms face to face at your solicitor or bank. Once you are on the plane, your options narrow considerably, and your costs can shoot up.
3. Don’t take a cheque
If you head back to the UK with a cheque made out in Euros and the intention to organise the exchange to Pounds when you get back, you are in for some nasty costs and delays. Banking a foreign cheque in the UK, whether at your own bank or that of a currency exchange company, will take several weeks to clear and incur significant bank charges. There is simply not an efficient system in international banking to clear cheques in countries where they are not issued – you need to insist on a bank transfer from your Portuguese bank or lawyer, to whoever you have chosen to take care of the exchange into Pounds. If your lawyer refuses, then bank the cheque in your own Portuguese Euro account, and make the international transfer from there before you leave – again, a UK-based currency specialist is likely to give you the best exchange rate.
4. Ignore recommendations from anyone involved in your sale
If you have sold your property through an estate agent, they will probably recommend a currency company to use. But beware, there is likely to be a commission payment involved, which is only ultimately paid for by one person – you! By shopping around independently and comparing rates with a reputable and regulated company you have found yourself, you are likely to end up with a better deal.
Whether you moved to Portugal when the exchange rates was €1.01 in 2008, or €1.60 in 2003, it’s important to make the most of your money. You have probably spent a lot of time and energy negotiating the sale of your property or other assets in Portugal at the best price you can achieve – don’t throw it away by forgetting that your exchange rate can make a huge difference to your new life back in the UK.
Currency Index are an independent, regulated currency broker in the UK, having won ‘Best Currency Company’ and ‘Best Customer Experience’ awards in recent years. You can visit their website here and see independent reviews of their service here.
IMAGE CREDIT: Wikipedia