Building savings contracts are concluded with a building society in order to use a contractually agreed building savings sum after saving with a minimum savings capital ( 30 – 50 % of the building savings sum) and receiving a building savings loan ( difference between minimum savings capital and building savings sum) after allocation for residential purposes.
In order to receive a building society loan, one must conclude a building society contract and save for it or fill it up with the minimum savings balance by making a one-time deposit.
The saving of the building society contract is to be made with a so-called minimum saving rate. This ensures that after a certain, precisely defined savings period, between 10 and 11 years, the minimum savings balance is met and thus the building savings contract is ready for allocation. Thus, the saver acquires his right to the low-interest building society loan.
Allocation of the building savings contract
When the minimum savings balance is reached, the building savings contract goes into the allocation fund. The immediate disbursement of the building society loan is not reached thereby by far yet. Since the building savings business only works by the fact that the savers have to pay the money into the building savings bank for the issuance of the building savings loans, there is always only a certain amount available for the building savings loans. This is stipulated by law and is checked and controlled by the Federal Supervisory Office. The order of the building savings contracts that are available in the allocation mass is decided by a valuation figure. The valuation number is calculated according to the formula "time x money". This means that the more money has been paid in and the longer it has been in the building society's allocation pot, the higher the valuation figure will be.
German building societies are forbidden by law to make promises about the exact time of allocation or to advertise the waiting time for allocation.
Disadvantages of building savings contracts
Building savings loans have the undisputed advantage of fixed and low interest rates over the entire term of the building savings loan. However, it is also necessary to accept some disadvantages.
Interest rates on building savings contracts
The first disadvantage lies in the low credit interest for the minimum savings capital to be saved. These interest rates are inevitably low, because with the capital, after all, the low-interest building society loans must also be disbursed. However, other forms of savings do not offer any more favorable options at present.
Less interest when saving the bauspar balance logically also means less credit on the bauspar account. The bauspar loan, which one must take up, is therefore higher with the Bausparen, than if one had saved the own capital elsewhere interest-consciously. If the interest losses that occur with home savings are factored into the effective interest rate, the effective interest rate increases not insignificantly.
Fees
The second disadvantage is the sometimes relatively high fees charged by the building societies. Building societies take at least the following fees:
Closing fees (this pays the sales force), account maintenance fees, loan fees, appraisal fees before issuing the home loan, fees for customer magazines.
There are here and there still further hidden fees, which make the loan nevertheless substantially more expensive in its effective interest rate.
As with all parts of construction financing is to be proceeded also here after the motto:
Building savings contract – compare-compare-compare!
Advantages of the home savings loan
The protection of the building society loan takes place in the range behind the so-called "1. Mortgage", which has a loan-to-value ratio of 60% of the mortgage lending value. The lending limit for the building society loan, on the other hand, is approx. 80% of the reasonable construction and manufacturing costs.
Public funding
There are various government subsidies for home loan savers who have a medium income. They guarantee attractive returns to the customers of building and loan associations. The state offers three options: the housing allowance, the employee savings allowance and the capital-forming benefits. The requirements to receive these benefits are based on income. Singles may have a maximum of 25.600 euros, married couples 51.200 euros per year earn.