FX Rates Killing me.

Hi 9ball, I don't have the best response for you, only a word from a fellow FX rate sufferer! We have some cash tied up in the UK that I'm desperate to pull back here and I'm waiting to see if the exchange rate improves.

Unfortunately there's not a lot we can do until the rate goes up. With another interest rate rise (or 2) coming, the Aussie dollar is going to get more attractive and hence, higher against the Pound, so the woes are continuing.

I believe the rate is about 2.25 today, so maybe there is light at the end of the tunnel.

I just hope your money's earning a decent rate in the UK!

Al

Hi there – I wonder if your post "headline" is appropriate!!  I am sure many people would like to have a property in London and be faced with the same "predicament".

Moving right along……I have made the presumption you are based in Australia and that your primary income is from the work you do in Australia?  If so, you have already done well so far to have a mortgage in the UK (did you work in the UK previously?).

As you mentioned one way is to basically take the spot rate on any one day and arrange for the funds to be sent across (which then creates two issues – whether to convert to AUD while funds are in the UK, or send in GBP and have converted to AUD on arrival in Australia).   While those two options seem minor, in fact they can mean significant costs or savings, particularly with the large amount of funding that is proposed to be sent over.  It would be wise to do some "dummy" investigation and check conversion rates of UK banks and Australian banks, and the costs involved on the basis a certain amount of money was being sent.

Where you mention you have re-mortgaged does this mean you have actually drawn down the additional loan, and that it is sitting in another bank account ready for repatriation?  Or do you mean you have an increased line of credit available to you that may be available to you to use?

My suggestion, and it would require a bit of investigation, would be to not get involved with the physical transfer of funds.  If you transfer funds inter-country, you create an immediate FX risk which is what you are concerned about.
Perhaps if you looked at borrowing locally, from an Australian lender, or better still, a lender in the UK that has affilliations with Australia (ie a UK parent with a subsidiary or office in Australia), then the UK bank could simply provide a bank guarantee or letter of credit to the local lender.  Of course, the local lender would need to be satisfied with the security offered, but should be manageable particularly if you already have an existing relationship with the Bank, other securities, etc.  Ultimately the main thing the local bank will need to be satisfied with is your willingness and capacity to repay the local debt, and if this aspect is assured, then the security(ies) on offer should be acceptable to them (eg A letter of credit/bank guarantee from a UK bank with high credit worthiness).

Using a letter of credit/bank guarantee removes any FX risk for you.  If things go belly up, the UK bank simply sells your UK property, and the local bank makes a claim from the UK bank.

Simple really!!

Good luck – David

Hi 9

I have sent you an email with details of a company that specialises in helping people save on the rates and fees in bringing in( and taking out) large sums of money,.