How to budget and make your property payments cheaper


Buying a propert doesn’t need to be complicated. You are already using Savvy Cat Realty, a property specialist; why not also use a specialist when it comes to your property payments?


Our partner, Spartan FX, can make these payments cheaper and easier for you.


WHY SHOULD I PAY ATTENTION TO EXCHANGE RATE MOVEMENTS?

Movements in the exchange rate can affect the final cost of your property. From start to finish, most property transactions usually take between 6-12 weeks, or it could take longer, the exchange rate can fluctuate significantly during this period.


We have seen exchange rates move very quickly. They can move 2% in a few hours which could make your €250,000 property $4,600 cheaper or more expensive.


Therefore, it is important to factor exchange rate movements into your budget and talk to a currency specialist who can help you to monitor the rate and control the cost of your property.

If you are selling US Dollars and buying Euros to send to your account in Portugal or to buy a property, now is still a fantastic time. But it is worth bearing in mind the US Dollar has been strong for quite a long time. USD/EUR is now vulnerable to several factors; future strategies to tackle inflation, interest rate hikes, potential currency interventions, recessions and the Ukraine/Russian war.



SHOULD I SOLELY FOCUS ON HOUSE PRICES?

No, you need to factor in the exchange rate and depending on whether it is moving in your favour or against you will make your property cheaper or more expensive. It could help to bring down those house price increases.


House prices in Portugal have increased by 12.9% year on year (based on statistics for Q1 2022, according to the Instituto Nacional De Estatistica). The exchange rate has improved for Americans by 12% since the start of the year, helping to negate the rise in house prices.


On a €250,000 property, the difference is $35,500.


If buyers hold off for 6-12 months, house prices could increase further, and the exchange rate could move against them. This would mean the total cost of buying a house could potentially double.


HOW TO BUY YOUR EUROS

Traditionally your bank would have been your first choice, but it is not necessarily your best option.


WHAT TO BEAR IN MIND WHEN USING YOUR BANK

  1. The exchange rates. There is usually about a 3-4% saving when using a currency specialist over your high street bank. It is always best to check.

  2. You can’t buy your Euros or secure the price of your Euros in advance of any payments or without the need for a Euro bank account.

  3. You don’t know the rate upfront. The exchange rate is the rate at the time of transfer which may differ from the rate you have been quoted. This means you do not know how many US Dollars or Pounds to send to convert the correct amount of Euros. If the amount is short, you may be late on a property payment and then there is the hassle of making another transfer.

Don’t worry; Spartan FX can help to manage these payments. You can use their service while waiting for your Portuguese bank account to be opened or use them to pay directly to the lawyer.


WHAT OPTIONS DO I HAVE AVAILABLE?


  1. Buy Euros in advance.

  2. Monitor the rate.

  3. Fix the rate with only a 10% deposit - If you have a completion date and do not have all the money available, you can fix the rate with a 10% deposit. This is not a cost or charge; the remaining 90% is paid when you require your Euros. Fixing the exchange rate means you are locked into a specific rate regardless of exchange rate movements. However, it means you can keep the price of your property within your budget.

Buying a property means you will need to transfer sums that are larger than you are used to. This can be quite a daunting experience. Having support with these transfers can be invaluable. Also, you want to make sure your money is secure and protected.

 

Hope this article was helpful, any questions you might have feel free to contact us! We are always available at contact@savvycatrealty.com or savvycat@spartanfx.co.uk if you need any assistance ;)


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