Thanks to the state premiums of 1.5 to 4 percent per year, the building savings contract is one of the most popular forms of savings for Austrians, despite times of low interest rates. In most cases, simply transfer 100 euros per month to the building society. But financial bottlenecks can always occur and then the saved thousands seem very tempting and even if this should not be the case, a building savings contract must be properly terminated to get the capital. In this article we explain the timely termination and early termination with some interesting details. Hopefully, this will clarify some pressing questions.
Cancel building society contract – on time
A large proportion of building savings contracts run for six years. During this time, the deposit is usually 1200 euros per year. Any amount above this will no longer be subsidized by the government and should consequently be invested in other financial products. In this beginner's investment guide, we provide information on this topic. Currently, 1.5% premium is paid by the state and many building societies guarantee a fixed interest rate of 0.5% for the first few years. For simplicity, let's assume these rates over the entire period, although the rates will probably go up again, as they are currently at their respective lower limits. We also ignored the potential decrease in interest rates (variable interest rate in the later years).
Through an appropriate annuity formula (here assumed in arrears, since only at the end of the year all payments of the year are booked) results in a final value or. Credit balance of at least 7569 euros. A handsome amount that is extremely realistic for a typical home loan saver. This sum from the bauspar can now be used to create housing, but also to invest in shares or other assets.
Your own bank advisor will usually contact you in good time before the six-year period expires. During the following conversation the use of the saved money is discussed. If a continuing building society loan, a new building society contract or the opening of a deposit is pending, then the advisor takes care of the termination at the same time.
Attention: If the financial advisor takes over the termination in the course of new investments or contracts, then only an additional signature of the investor is necessary → Consequently, private savers often overlook the fact that a building savings contract must always be terminated properly!
Cancellation form for download
However, the investor can also terminate the building savings contract himself. The corresponding letter or. Form must necessarily include the following points, which usually takes care of the bank consultant. In the case of independent termination, the document is sent directly to the building society.
- Name and address
- Cancellation building savings contract including number
- Transfer at the end of the commitment period or immediately before the minimum duration
- In case of disbursement before the end of the commitment period, it must be stated whether the amount will be used for the purpose for which it is intended
- Bank details
- Signature
If Wustenrot is the building society used, the business share must also be terminated. From the enumeration it becomes clear that the minimum period resp. the commitment period plays a significant role in the termination of the contract.
The early termination
As consideration for the national premium the legislator writes a minimum commitment period and/or. Term of six years before. If the bauspar contract is terminated before this period, this can have serious consequences. Above all, the recovery of premiums is particularly painful. But this does not have to be!
The repayment of the premiums can be prevented if the amount of money is used for a suitable purpose. This means that if a trip is taken with the amount, the state will demand its premiums back. However, the premiums may be retained when investing in the creation of new living space.
Tip on suitable use: renovation work in the apartment or house can also be considered such a use. However, find out about this from your advisor before you think about terminating the building society contract. The renewal of the sanitary facilities is easier to justify than new furniture and painting work in the living room. So not every renovation is considered a suitable use!
In the case of premature termination, not only the premiums have to be paid, if necessary, but also the savings. not only the interest will be refunded, but also the interest will be recalculated by the building society. This practice turns out to be particularly painful, as the account maintenance fees are an unyielding burden on the deposited amounts. Furthermore, a contribution to administrative costs measured against the total contract amount and a termination fee are retained. In short, the cancellation can be expensive and destroy all the benefits of building savings contracts. As a rule, costs of 200 to 300 euros must be expected for early termination. This amount does not yet include inflation.
Tip for early termination: Be sure to ask for the final amount, which will be paid after the termination. Only based on this amount and after reconciling it with the financial hardship can it be determined if the termination is a wise decision.
Tip on termination fees: The General Terms and Conditions for Home Loan and Savings Business (ABB) of your respective home loan and savings bank list the fees for termination on a staggered basis. In most cases, these amount to a percentage of the monthly agreed installment, with the percentages decreasing over time. In the first two years the costs usually still amount to the double of the monthly premium (200%), while in the fifth year it is only roughly 40%. The later the notice is given, the more favorable this decision will be! Keep this in mind especially when signing the contract!