Advantages of Using a Currency Exchange Company
Anyone can google “currency exchange calculator” and get the most up to date exchange rates. The problem is that the rates you will find this way are only be available to the banks themselves, or large exchangers that change millions every day. People like you and I can’t get these “spot rates” and are left contacting several companies to get quotes.
Banks are a good place to start with currency exchange, however most banks don’t exchange currency as their primary business. So, the rates they can quote you are typically not going to be the “spot rate” you find on the internet (they make a profit on the back end performing the exchange) and may also charge a fee on top of that. You can contact several banks and see a difference between what each one will quote you as the exchange rate between the same two currencies. When it comes to exchanging a few hundred thousand dollars purchasing or selling a home, every basis point can equate to hundreds or thousands of dollars. Making a few calls can pay huge dividends!
I would recommend contacting banks that have branches in both your home country and the US. With operations in both countries, they are likely to be the most competitive vs an exchange company for a straight currency exchange. For Canadians, that means TD Bank and RBC.
Typically, however, you will find that the best exchange rates are found through currency exchange companies. For example, MoneyCorp (you can request a quote and get more information about their special programs through THIS LINK). In addition to potentially saving you thousands in exchange costs. There are other very significant benefits of using a company like this when purchasing Real Estate.
1. Locking in Rates:
Purchasing a home in the US can take as little as 15 days if buying for all cash. Typically, 30-45 days if using financing, and a few months if purchasing new construction that isn’t finished yet. That doesn’t however include the time involved with finding the right property and getting an offer accepted. Currency values fluctuate daily and if the trend goes against you, you could find that the home you wanted to buy in the US just went up several thousand dollars based solely on currency movement.
Currency specialists can offer a rate lock of up to TWO years with just a 10% holding deposit and typically an option to “float” the rate down should the exchange rate improve.
2. Ease of International Wires:
US banking laws put restrictions on wiring funds anywhere outside of the US for both terrorism and money laundering deterrence as we
ll as banks themselves have restrictions due to the potential for fraud. So, wiring funds into a US bank account is quite easy, but wiring funds back home can be a challenge as banks will require you initiate that kind of wire in person from a bank branch here in the US.
This mainly is an issue when you sell a home and have a large amount of US dollars you want to repatriate. For the most flexibility and ease of use it may be wise to have proceeds of a sale be sent to your currency exchanger directly vs. to your US bank account. They operate under a different set of laws and can be great choices for holding funds short term and moving funds to and from the US with ease.
Like the stock market, the ups and downs of the currency markets can be a mystery to most people (like me!). No one can predict day to day fluctuations, but currency exchange companies employ experts to evaluate the markets hourly and offer their knowledge, without charge, about the likelihood of which way currencies may be going in the next week, month, or year to help you plan the best time to make a conversion, set to make a conversion automatically happen at certain rates, or when it may be a good time to use any one of the several options specialists can offer to optimize currency conversion.