02 March 2008
Canadian Snowbirds buying in Mexico
As published in http://www.hifx.com
Each year, more than a million Canadians, affectionately dubbed "Snowbirds" migrate to southern climes to enjoy warm weather and sandy beaches. The strong Canadian dollar (CAD) is making the trip more affordable and attractive than ever.
Mexico is heating up as a popular destination. According to Mexico Tourism Board, about 700,000 Americans and Canadians live in Mexico year-round or part-time. Popular retirement havens for Canadian and American “Snowbirds” are Guadalajara, Lake Chapala, San Miguel de Allende, Cuernavaca, Oaxaca and Guanajuato.
If you are a resident of the Canada buying property in Mexico, whether as an investment, vacation or retirement home, or to live permanently, you will have to perform one or more currency transactions to complete your property purchase. With foreign exchange services from HiFX you can ensure you will get the best rate of exchange on your currency exchange when buying property abroad.
Whatever your reasons, buying property in Mexico is a serious investment, and as such requires planning, especially if you are buying a new ‘off plan’ property where you are required to make several 'stage payments' during the construction of your property.
Foreign Exchange for buying Property in Mexico
For illustration purposes, let us assume that you are Canadian resident buying property in Mexico. The developer will require a deposit in US Dollars (USD) or Mexican Peso (MXN) straight away, and then further "stage payments" during its construction over the next 18 months, with a final payment upon completion. You will know the price of the property you plan to buy in US Dollars (USD) or Mexican Peso (MXN) and this should not increase unless you upgrade the specification of the villa.
The actual cost in Canadian Dollar (CAD) will be determined by the timing of your currency purchase. Naturally, if Canadian Dollar (CAD) strengthens during construction, the cost of buying your property in Mexico will decline but if the US Dollar (USD) or Mexican Peso (MXN) strengthens then your costs will increase - i.e. a stronger Dollar means your investment will be more expensive! (This will also apply to those purchasing a straight 're-sale' property where there is a gap between the offer being accepted and the completion of the sale).
The foreign exchange experts at HiFX can advise you on the best time to exchange your money to make your purchase. If you have strong views about future currency exchange rates, you could wait to buy your currency at some stage between agreeing to buy the property and the date that currency is required. This applies to either buying (and paying for) all of the currency (a spot trade) or fixing a rate (a forward contract). Either way you are exposing yourself to currency risk.
Remember: You would never agree to buying a property in your country of residence if you did not know how much it was going to cost you; if you agree to buying property in Mexico without fixing the exchange rate at the outset, you are taking a gamble. The team of experts at HiFX can provide you with information on the best time to exchange your currency so that you get the best rate of exchange on your property purchase.
Don't panic! If you are still confused, we have a team of dedicated specialists who will happily explain the various strategies mentioned above, and keep an eye on the market for you. Please do not hesitate to call with any questions that you may have on buying your Mexico property.
Since its foundation in 1998, HiFX has helped over 40,000 private individuals buy and transfer foreign currency, many of whom have bought a home in Mexico.
If you would like further information on how to buy foreign currency for property in Mexico or any other country, and how to obtain the best exchange rate, please call HiFX Private Client Services at 1 877 999 4439 or alternatively visit the HiFX website to have one of their consultants call you at your convenience.
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