Moving to Oz in July 2021 - transferring life savings

[Jbaker]

So 309 visa has been granted, now thinking about the practicalities of moving money to Oz.  We have a significant six figure sum having already sold our UK home in anticipation of this.

I get the point about using a specialist fx money transfer company to get the best exchange rate but just wondering what others did in this situation.  I’m happy to lock in at approx the current exchange rate (or at least get half done pretty much straightaway).

The options seem to me to be:

i) set up a AUD denominated account with a UK bank and then transfer the money into it, then just transfer the lot into an AUD account with an Australian bank shortly before we move - this seems safest I think and would allow me to manage fx risk by transferring into AUD progressively over time but doesn’t have the access issues of (ii) below. 

ii) open an AUD account with an Australian bank now and transfer the money into it now (seems the risk of this is that it might be difficult to access the money until we turn up in Australia and present ourselves at the bank - this is only a problem if we need it for unforseen circumstances like unexpected medical expenses but still makes me worry a bit)

iii) enter into a forward contract with an fx transfer company - seems the risk of this is that I would need to make a margin payment to the company which I would lose in the event they went bust (so more risk than having it in a major bank which is less likely to go bust in a way which results in financial loss to retail investors).  I could mitigate this risk by splitting up into say four forward contracts with different brokers.  Still not sure I fancy it - presumably margin is at least 10%.

iv) wait until just before we move and just transfer it all in one go into an Australian bank - don’t fancy taking that exchange rate risk given £ could take a significant hit from brexit.
 

Anyway any thoughts / experiences welcome.

[Guest The Pom Queen]

1 hour ago, Jbaker said:

So 309 visa has been granted, now thinking about the practicalities of moving money to Oz.  We have a significant six figure sum having already sold our UK home in anticipation of this.

I get the point about using a specialist fx money transfer company to get the best exchange rate but just wondering what others did in this situation.  I’m happy to lock in at approx the current exchange rate (or at least get half done pretty much straightaway).

The options seem to me to be:

i) set up a AUD denominated account with a UK bank and then transfer the money into it, then just transfer the lot into an AUD account with an Australian bank shortly before we move - this seems safest I think and would allow me to manage fx risk by transferring into AUD progressively over time but doesn’t have the access issues of (ii) below. 

ii) open an AUD account with an Australian bank now and transfer the money into it now (seems the risk of this is that it might be difficult to access the money until we turn up in Australia and present ourselves at the bank - this is only a problem if we need it for unforseen circumstances like unexpected medical expenses but still makes me worry a bit)

iii) enter into a forward contract with an fx transfer company - seems the risk of this is that I would need to make a margin payment to the company which I would lose in the event they went bust (so more risk than having it in a major bank which is less likely to go bust in a way which results in financial loss to retail investors).  I could mitigate this risk by splitting up into say four forward contracts with different brokers.  Still not sure I fancy it - presumably margin is at least 10%.

iv) wait until just before we move and just transfer it all in one go into an Australian bank - don’t fancy taking that exchange rate risk given £ could take a significant hit from brexit.
 

Anyway any thoughts / experiences welcome.

I would and did myself use @Susan from Moneycorp . That was over 16 years ago now and like you I was so nervous at the time that I would lose everything I owned. Moneycorp were fantastic and kept me updated every step of the way. It’s free to set up an account with them. 

[Susan from Moneycorp]

Hello JBaker!  ~ and huge congratulations on your 309

Moving over to Aus was the best decision I've made and telling others how fantastic it's going to be for them here never gets old.... super excited for you!
(& as of today you could even go to Queensland  )


Like you, I had to do the same with my savings.
I sold everything I owned and had to change it to AUD.
Rest assured (iii) you're covered for any UK Financial Institution loss for the first £85,000 you have entrusted to them.
Additionally, under point (iii), a margin forward contract is typically between 5% & 10%

(i): Transferring AUD progressively into a UK Institution with an AUD facility (I believe CBA & HSBC among others still do these accounts) gives you the opportunity to average your       GBP/AUD trades and book them when the rate is in your favour.
      Good idea to check that bank's fees for AUD transfers as/when you wish to send over your balance.
      With Moneycorp, you can hold both AU$ as well as a GB£ in your account and leave your AUD with us until you're ready to send it to Australia.

(iv): I find most of my clients moving to/from Aus decide to book their GBP or AUD in tranches, monitoring the rate for the level they would like to achieve.
        It eliminates the risk of having to trade 100% of your sum if the market goes against you.
        Your personal account manager at your FX provider will be able to monitor this for you 24/7 across the timezones so that you don't have to lose sleep (or get an ulcer) watching it yourself.

Always here for a chat - let me know if you'd like to catch up, and congratulations again!


Sue,

 

 

 

 

 

 

[MARYROSE02]

I still have a UK bank account - an online one and my UK rent on my home is paid into that account. I suppose  I could start getting the rent paid directly into my Aussie account as I do with my two UK pensions. I used to transfer money from the UK to Australia using my UK bank but then I changed to Transferwise which seems to cost me about 5 quid as opposed to 25 (on a thousand pounds or so). It is a very simple process - transfer the money from my UK account to Transferwise's UK bank account and do a short process on their website, and within a few hours or next day the money is in my Aussie account.

[Parley]

1 hour ago, MARYROSE02 said:

I still have a UK bank account - an online one and my UK rent on my home is paid into that account. I suppose  I could start getting the rent paid directly into my Aussie account as I do with my two UK pensions. I used to transfer money from the UK to Australia using my UK bank but then I changed to Transferwise which seems to cost me about 5 quid as opposed to 25 (on a thousand pounds or so). It is a very simple process - transfer the money from my UK account to Transferwise's UK bank account and do a short process on their website, and within a few hours or next day the money is in my Aussie account.

Could you just withdraw the money from an ATM here straight from your UK bank using a UK debit card ?

[MARYROSE02]

9 minutes ago, Parley said:

Could you just withdraw the money from an ATM here straight from your UK bank using a UK debit card ?

Yes, but I am pretty sure there is a charge each time I do it? I used to use my UK Visa Debit card all the time but very rarely now. Every so often I transfer funds if I need them. June was the last time but I have had a couple of big bills so I shall be doing it again soon.

[Marisawright]

1 hour ago, MARYROSE02 said:

I still have a UK bank account - an online one and my UK rent on my home is paid into that account. I suppose  I could start getting the rent paid directly into my Aussie account as I do with my two UK pensions. I used to transfer money from the UK to Australia using my UK bank but then I changed to Transferwise which seems to cost me about 5 quid as opposed to 25 (on a thousand pounds or so). It is a very simple process - transfer the money from my UK account to Transferwise's UK bank account and do a short process on their website, and within a few hours or next day the money is in my Aussie account.

If you get the rent paid straight into your Australian bank account, you will lose on fees, so I wouldn't do that. 

@Susan from Moneycorp, if MaryRose02 opened a Moneycorp account, could the agent pay the UK rent straight into the Moneycorp account in pounds sterling?  That would save one step in the process. 

[Susan from Moneycorp]

@Marisawright - yes, I believe so. Our clients are advised when a credit has been made to their accounts.

[Marisawright]

9 minutes ago, MARYROSE02 said:

Yes, but I am pretty sure there is a charge each time I do it? I used to use my UK Visa Debit card all the time but very rarely now. Every so often I transfer funds if I need them. June was the last time but I have had a couple of big bills so I shall be doing it again soon.

It depends which bank you're with. That's why I provided that link to the Money Saving Expert, he lists the UK banks that don't charge fees on international transactions. 

When we went to Spain last year, we used our Australian cards from ING bank.  We did our research and it worked out cheaper to use our ING cards than any other option.  But that's not the case with every bank. For instance, our Commonwealth Bank cards had high fees so we didn't use them.

Doesn't do you any good though, because you can't change UK banks as you're now resident in Oz.

Edited November 25, 2020 by Marisawright

[Wanderer Returns]

3 hours ago, MARYROSE02 said:

I still have a UK bank account - an online one and my UK rent on my home is paid into that account. I suppose  I could start getting the rent paid directly into my Aussie account as I do with my two UK pensions. I used to transfer money from the UK to Australia using my UK bank but then I changed to Transferwise which seems to cost me about 5 quid as opposed to 25 (on a thousand pounds or so). It is a very simple process - transfer the money from my UK account to Transferwise's UK bank account and do a short process on their website, and within a few hours or next day the money is in my Aussie account.

@MARYROSE02 I'm pleased to see I'm not the only one who's moved into the 21st Century on this one - it's not hard, is it?!

[ramot]

2 hours ago, Wanderer Returns said:

@MARYROSE02 I'm pleased to see I'm not the only one who's moved into the 21st Century on this one - it's not hard, is it?!

We have everything paid into UK bank account and always use transfer wise. Can’t fault their efficient prompt service. Would never transfer bank to bank. 

[Jon the Hat]

10 hours ago, Susan from Moneycorp said:

Rest assured (iii) you're covered for any UK Financial Institution loss for the first £85,000 you have entrusted to them.
 

Actually if your funds are a temporary large amount due to a single transaction such as selling a house (or divorce or inheritance) you are protected up to £1m for 12 months.

https://www.fscs.org.uk/how-we-work/claims-process/temporary-high-balances/

[Wanderer Returns]

It's worth mentioning that a lot of companies will suck you in with the promise of low fees, but their exchange rates are poor so you end up with less after the transfer. The bottom line is what's important.

Back in the UK the Post Office advertises to buy all your unused travel money back 'commission free' if you bought it from them in the first place, but the spread between their buying and selling prices can be almost 20% - how kind of them!

[bicek]

This is all really helpful advice, thanks everyone who has contributed thus far! 

I am just nudging in on the topic here, and wondering if I can get some advice on where best to "store" life savings in the interim... whilst waiting for a good exchange rate, and waiting to find a house to purchase. It could take us months, possibly over a year to get from the point of selling in the UK, to buying a house in Oz. We have no idea where we should keep our money (in terms of safety, and accumulating some form of interest). 

Any advice would be very appreciated. 

[Susan from Moneycorp]

Hi again

Have a look online at the Top Aus savings accounts which give bonus interest rates - the longest bonus I've seen was 6months with AMP (Before christmas), typically they're a 4 month introductory period.

Unlike other countries, with almost all Australian savings accounts the interest is accrued daily and added to your balance at the end of every month.
I think that's a very good deal compared to overseas banks and rates.

Different comparison sites get paid by different banks to champion theirs as the highest interest rate, so make sure you look at at least four different comparison sites:
Finder
Compare the Market
Mozo
etc.....

Hopefully you'll be able to get something as close to 1.5% as possible - There may even still be a couple of 1.75% left out there ~

S,

 

[MARYROSE02]

On 25/11/2020 at 14:19, Parley said:

Could you just withdraw the money from an ATM here straight from your UK bank using a UK debit card ?

Unless things have changed, I think there is a charge every time you use the ATM? Is it free of charge? It took long enough for the "big four" banks in OZ to stop charging to use each other's ATMs?

There was a time when I did use my English debit card regularly to withdraw cash in OZ but I'm sure it wasn't free? If it is free of charge I might start doing it again.

For the last six months I've not touched the UK bank account and having to transfer it by going online stops me from spending it too freely. I've got some debts to pay now however, ATO as usual wanting their cut.

[MARYROSE02]

5 hours ago, bicek said:

This is all really helpful advice, thanks everyone who has contributed thus far! 

I am just nudging in on the topic here, and wondering if I can get some advice on where best to "store" life savings in the interim... whilst waiting for a good exchange rate, and waiting to find a house to purchase. It could take us months, possibly over a year to get from the point of selling in the UK, to buying a house in Oz. We have no idea where we should keep our money (in terms of safety, and accumulating some form of interest). 

Any advice would be very appreciated. 

I thought you just took "pot luck" with the FX rates, unless you are lucky enough to have a nice sum at precisely the optimum FX rate. When were the glory years when we all sniggered as Aussies complained about $3 to a quid?! I got $1.45 for a pound when I first came to OZ in 1978.

I'm also sure that when I took my mortgage out in 1987 the interest rate was 18 per cent? It sounds impossible now? Does that mean you got a similar rate on your savings at that time?

[Marisawright]

5 hours ago, bicek said:

This is all really helpful advice, thanks everyone who has contributed thus far! 

I am just nudging in on the topic here, and wondering if I can get some advice on where best to "store" life savings in the interim... whilst waiting for a good exchange rate, and waiting to find a house to purchase.

You can keep your money in a Moneycorp account while you're waiting for the right exchange rate.  No interest, but then you're only going to get 1% or 2% on short-term savings anyway, which won't make much difference in the space of a few weeks.  It's a proper bank account so covered by the bank guarantee like any other deposit. 

Once you move it to Australia, all Australian banks are protected by a bank guarantee up to the value of $250,000. So if you have more than that, split it across a few banks.  As Susan says, use the comparison sites like Mozo to track down the highest interest rates.

[Marisawright]

5 minutes ago, MARYROSE02 said:

I thought you just took "pot luck" with the FX rates

If you're transferring with a company like Moneycorp or Transferwise, you can agree what FX rate you want for your transaction.  They'll monitor the market and transfer the money for you when that rate is reached. I have no idea whether it costs extra to do that. 

When we were on holiday in 2019, we used our Australian cards at ATM's all over the UK and Europe and never had to pay a fee.  Most of them didn't charge a fee, and the ones that did gave a warning on the screen, so we could cancel.   Of course, you may not get the best exchange rate with your British card (and make sure it's a debit card not a credit card or you'll be charged for a cash advance too!).

The other alternative is to use your British credit card or debit card to do your everyday shopping. It's accepted just like an Australian card and there's no fee then either. 

[bicek]

7 hours ago, Marisawright said:

You can keep your money in a Moneycorp account while you're waiting for the right exchange rate.  No interest, but then you're only going to get 1% or 2% on short-term savings anyway, which won't make much difference in the space of a few weeks.  It's a proper bank account so covered by the bank guarantee like any other deposit. 

Once you move it to Australia, all Australian banks are protected by a bank guarantee up to the value of $250,000. So if you have more than that, split it across a few banks.  As Susan says, use the comparison sites like Mozo to track down the highest interest rates.

But if a few weeks turns into a year... I'd prefer to keep my money somewhere where it is generating at least SOME interest. Not in a no interest transfer account. 

I'll definitely spread it here, and also once it's in Australia. I guess I will have to settle for the crappy interest rates the high street banks are offering currently. 

[bicek]

7 hours ago, MARYROSE02 said:

I thought you just took "pot luck" with the FX rates, unless you are lucky enough to have a nice sum at precisely the optimum FX rate. When were the glory years when we all sniggered as Aussies complained about $3 to a quid?! I got $1.45 for a pound when I first came to OZ in 1978.

I'm also sure that when I took my mortgage out in 1987 the interest rate was 18 per cent? It sounds impossible now? Does that mean you got a similar rate on your savings at that time?

The exchange rate is predicted to plummet (not in our favour) this year (of course it's impossible to say, but we are prepared for it to not go in our favour) so we won't be transferring the bulk of our life savings until we can get an acceptable rate.

We will have to transfer SOME of it to get us started over there so will just have to accept whatever the rate is at the time we move, but we will be renting initially anyway, so we won't be in a position to purchase a house straight away. My husband is typically self employed so we have a bit of a wait to build some employment history over in oz before the mortgage lenders will consider our mortgage application. I'm about to have a baby so not in a position to get a salary just at the moment, so we are reliant solely on his income for the next year or so. 

I remember when we moved to the UK in the late 90s and Aussie had a very poor rate ($2.70 to £1), my mum lost so much money relocating!! Will be just typical if this happens to me in the reverse direction, after all these years.... 

[MARYROSE02]

On 18/01/2021 at 14:12, Marisawright said:

If you're transferring with a company like Moneycorp or Transferwise, you can agree what FX rate you want for your transaction.  They'll monitor the market and transfer the money for you when that rate is reached. I have no idea whether it costs extra to do that. 

When we were on holiday in 2019, we used our Australian cards at ATM's all over the UK and Europe and never had to pay a fee.  Most of them didn't charge a fee, and the ones that did gave a warning on the screen, so we could cancel.   Of course, you may not get the best exchange rate with your British card (and make sure it's a debit card not a credit card or you'll be charged for a cash advance too!).

The other alternative is to use your British credit card or debit card to do your everyday shopping. It's accepted just like an Australian card and there's no fee then either. 

I do have a debit card from my UK bank account but I'v'e not used ti for a long time to make cash withdrawals or pay for goods and services. Perhaps I shall do a test run and see what, if anything I get charged.

I stuffed around with so many things and/or dithered/been overly sentimental about bricks and mortar.  I'm not going back to live in the house in England and my parents are in the churchyard. It's the same with my flat in Sydney though perhaps there's a case for renting it out not selling it.

Perhaps I need to start a new thread on the subject of: What did you do with your "baggage" in the UK, both physical and mental when you came to OZ? Are you dragging it around with you like Marley's ghost (in A Christmas Carol) or have you disencumbered yourself?

I am better at replying to other people's posts than starting my own!

[Marisawright]

8 hours ago, MARYROSE02 said:

I do have a debit card from my UK bank account but I'v'e not used ti for a long time to make cash withdrawals or pay for goods and services. Perhaps I shall do a test run and see what, if anything I get charged.

Good idea. There will be a fee for the currency exchange, but you pay that anywhere, even with Transferwise (unless you have a fee-free Moneycorp account).

 

8 hours ago, MARYROSE02 said:

I stuffed around with so many things and/or dithered/been overly sentimental about bricks and mortar. 

In the current circumstances, that is not a bad thing. Ask yourself, if you sold your UK and Sydney properties, what would you do with the money?  Would you be happy risking it in the stock market?  No.  If you put it in the bank, it will earn no interest.   Keep your Sydney flat and rent it out, it's a much better use of your money.   

You are very well-placed financially.   The Barefoot Investor's advice is to keep enough money in easily accessible funds for two years' living expenses.  You don't need any more cash than that, because two years gives you plenty of time to sell properties or shares. Superannuation counts as "easily accessible", so if you have two years'  income in there, you're all set.  Your properties are your rainy-day money.  As you age and need that money to live on, you sell one or the other. 

[MARYROSE02]

8 hours ago, Marisawright said:

Good idea. There will be a fee for the currency exchange, but you pay that anywhere, even with Transferwise (unless you have a fee-free Moneycorp account).

 

In the current circumstances, that is not a bad thing. Ask yourself, if you sold your UK and Sydney properties, what would you do with the money?  Would you be happy risking it in the stock market?  No.  If you put it in the bank, it will earn no interest.   Keep your Sydney flat and rent it out, it's a much better use of your money.   

You are very well-placed financially.   The Barefoot Investor's advice is to keep enough money in easily accessible funds for two years' living expenses.  You don't need any more cash than that, because two years gives you plenty of time to sell properties or shares. Superannuation counts as "easily accessible", so if you have two years'  income in there, you're all set.  Your properties are your rainy-day money.  As you age and need that money to live on, you sell one or the other. 

Thanks Marisa.

I suppose I was pondering, "should I sell Surry Hills and buy in Surfers Paradise?" or "rent out Surry Hills and rent in Surfers Paradise?" I did wonder if my super counted as "easily accessible?" This is basically the super which I accrued  partly before I went back to England in 1996 which I did not take as part of my redundancy package, and partly from work I've done in OZ since I returned to Sydney in 2008

My job pre 1996 changed from Commonwealth Public Service to private company so I stopped paying into ComSup and joined Aussie Super.  When I was retrenched my ComSuper provided an immediate pension which I still get. I figured that the money in Aussie Super would be useful for any unexpected bills, e.g. I may need a hernia op and there is a few grand if I go private. The super becomes my health fund?

I suppose I can see the rent from my U K house as another kind of pension to go with the UK state pension, Royal Mail pension and ComSup pension, which all sounds like a lot but it isn't. Another, say $500 a week if my Surry Hills flat was rented out would probably boost my income above the threshold at which I would have to start paying HECS!

[Marisawright]

4 hours ago, MARYROSE02 said:

I suppose I was pondering, "should I sell Surry Hills and buy in Surfers Paradise?" or "rent out Surry Hills and rent in Surfers Paradise?"

I did wonder if my super counted as "easily accessible?"

It's up to you, but if your rent from Surry Hills can pay for your rent in Surfers, then I say, why put yourself through the stress of selling?   

At your age, your super should be "easily accessible".  It would be worth contacting Aussie Super to see how much notice you'd need to give them, if you wanted to make a small withdrawal. That way you'll know for sure.