Whether you’ve just started your new life in Expatland or are looking to move back to your country of origin, the need will undoubtedly arise to exchange foreign currency.
Your personal circumstances will determine why you need to exchange currency, the frequency by which you transact and the volume. A currency need will typically arise from:
- Transferring life savings
- Selling and/or buying a property in your country of origin and/or Expatland
- Pensions transfers
- Repatriating income
- Investing in assets domiciled in Expatland
- Sending money home to friends and/or family
So what should you be aware of when converting your currency and sending or receiving cross-border payments?
- Are you really getting the best rate?
You trust your bank with your day-to-day banking needs so surely they must be the best option for your foreign currency and international payments needs? The reality is however, that for retail clients the daily buy/sell rates set by the banks often include a cost to transact plus additional sending and receiving fees.
By doing your research and venturing beyond the banking relationship to an alternative foreign exchange provider like XE Money Transfer, you’ll find that you will be able to take advantage of a much higher rate of exchange and no transfer fees – saving you thousands of dollars on your international money transfers.
- Protect yourself from currency risk on high value transactions
When making high value transactions that occur over a longer period of time, you may want to mitigate currency risk by locking in a favourable rate of exchange.
Currency risk refers to the uncertainties faced by fluctuating exchange rates and can have a significant effect on the outcome you achieve when it comes to executing your currency conversion.
Contrary to what you may think, you are not restricted to simply accepting the spot rate you are given on the day.
At XE, we provide a range of risk management transactions from Market Orders to Forward Exchange Contracts (FECs) and more complex structure options and our team will be able to advise you on the right strategy to ensure you are getting the best rate of exchange and are not left at the mercy of exchange rate movements.
Relocating to a new city or destination is an exciting yet daunting time for the individual, couple or family.
The best piece of advice you’ll hear, is to plan for your move well in advance. It will help to reduce the stress which can be overwhelming at times, especially if its your first venture into Expatland.
Tips on What to Do Before You Move
Declutter. It’s not only cathartic to do a clear out before the move but also makes perfect sense. It’s much more difficult and stressful to try and declutter when the packers are there. The packers can’t make those decisions for you, “Should that stay or should it go”?
Organise rubbish collection, garage sales and donations to thrift / charity shops in plenty of time before packing day. You’ll feel better for it and you’re not paying for transporting ‘stuff’ that you may very well throw out when you move into your new home.
Accept help when it’s offered from friends and family. Put your super cape away! It’s o.k. They want to help! Whether for child-minding duties, replenishing the mugs of tea or coffee or cooked meals, it all helps in reducing the stress. Especially on packing day.
If moving with children, get some small packing boxes in advance from the moving company. Let them draw on them, colour them in, write their names on them. They can pack those precious soft toys in preparation for the move. Imagine their excited faces when they recognize their own boxes arriving safe and sound at your new home.
Decide in advance what you will need to:
a) Take on the flight. Those items you’ll need immediately on arrival.
b) What might need to be sent airfreight (that can be expensive) but you can get access to it earlier than if it’s shipped seafreight.
c) Then what needs to go into storage at your destination until you find your new home.
Most important of all, choose an experienced, industry approved relocation company.
When the Relocation consultant has expat experience themselves, they understand and appreciate the stress and pressure that comes with the move. Remember they are your first port of call on this amazing journey, so you want to feel confident and happy with the service they offer.
Get that right at the start and they will assist and support you, listen to your concerns and advise you, as you embark on this exciting journey.
Written by: Nuss Relocations
Expat service providers are excellent at helping those moving abroad to get ready for their first adventure.
At Expatland, we have a team of industry professionals primed and ready to help with finances, visas, and the all important logistics. But what if you are already an expat? Can the Expatland Global Network still help you?
The answer is yes.
Once you settle in to your new life you’ll continue to handle your finances, taxes and mortgages. You may also have investments or properties back in your home country that need managing. You may even consider returning home at some point. Our E-Teams are here to help with all aspects of being an expat.
Let’s talk about moving back home and some of the pitfalls that can occur.
Introducing The Smiths
The Smith family have been expats for over 10 years. They relocated from Melbourne and have lived in both Singapore and Hong Kong with their two children.
The Smiths kept their apartment in Melbourne worth circa $800K and they had a residential investment home loan secured against it for $450k.
They’ve decided to return home in the next two years to purchase a family home, so started the process of applying for a new home loan with an Australian Offshore Bank that they had used previously. They started their application for a home loan of $1.2m. They signed the contracts with a finance clause and they expected to secure approval within two weeks.
Signed, Sealed, Delivered?
Unfortunately the two week deadline came and passed and the Smith’s were informed that their loan was declined after an excruciating four week process.
Initially the bank processed the application as an investment home loan, not a home loan. This meant they would have had a much higher interest rate. Not only that, they discounted both the bonus income of Mr & Mrs Smith and their salary entitlements by 20%, which can be typical of Australian lenders.
How did this happen?
Well, the bank didn’t truly know their client. They didn’t understand the needs of an expat trying to return home. They didn’t understand the expenses an expat incurs and much of their time was wasted trying to understand their customer after it was too late.
Unfortunately, The Smith family had already committed to their purchase and were due to settle within 6 weeks, which resulted in a variety of panic applications with online lenders, which were not fit for purpose.
Understanding is key
The Smiths were then recommended to Aus Finance Group, part of the Melbourne E-Team in Expatland’s Global Network. Aus Finance Group (AFG) has spent significant amounts of time working with lenders to understand the policies and procedures relevant to expats. AFG immediately understood the Smith’s needs and prepared to match them with lenders who understood their requirements.
Within 24 hours all information matter was canvassed to two Australian banks that took into account their bonus income. The Smiths were identified via Skype and executed documents in Singapore. The loan approval was granted within four business days at the terms they wanted.
This only goes to prove that expats needn’t be disadvantaged by their circumstances if they are connected with the most relevant service providers.
How AUS Finance Group can help you
One of the largest challenges as an expat is dealing with your Australian Bank & Financier whilst earning income offshore.
Lenders will typically discount the attributable value of salary & bonus income by 20-100% depending on the source and contractual arrangements behind them. AFG has already identified suitable Lenders who best recognise expat’s offshore income.
Furthermore, Lender’s debt servicing has become rules based and more stringent. This means it will now typically sensitize a borrower’s servicing ability by discounting foreign income sources, i.e.:
- Discount contractual base salary by 20%;
- Discount bonus income by up to 100%; and
- Assess net income (adjusted for above) at Australian tax rates.
AFG will assess your requirements and identify a Lender who will best recognise offshore income.
It will then submit full loan applications together with supporting documentation, manage a Lenders loan application, identification & security process on the expat’s behalf and proactively keep the expat informed of developments.
by: AUS Finance Group
Looking to buy a house in Melbourne? Whether you are transferring from or returning to Australia, you will need to consider your mortgage finance options and the tax implications of the such a decision.
Melbourne E—Team member, Malcolm Ferdinands from AUS Finance Group Pty Ltd has written a guide on Mortgages to help with all the issues you need to think about when dealing with an Australian Mortgage.
In this guide, Malcolm discusses issues such as:
- Types of Mortgage Products
- Loan to Value Ratio and Mortgage Insurance
- Foreign Currency Loans
- Expat Borrowers Service Curse
This is a fantastic guide for anyone looking for information regarding Australian mortgages.
To download click here.