A savings contract is concluded with a bausparkasse, which is known as a bauspar contract or a bauspar loan. In Germany, there are currently almost 20 million bauspar contracts, and the number is rising. The saver uses this loan to finance a property. And uses this building savings contract as a security account for its interest in the loan phase. The bauspar contract is also a tax-subsidized form of investment.
The capital-forming benefits are subsidized for the granting of an employee savings allowance or a housing construction premium and, in addition, the saver receives interest. If it comes to the bauspar contract, a contract is concluded, which makes on the basis of the bauspar tariff the savings interest, the redemption period, the savings period and possibly a minimum contract period. The amount to be saved at the time of allotment is also determined, as well as the redemption payments and the amount of the closing fee. Building savings can also be chosen between different tariffs.
In Germany, by the way, 37% of Germans have a building savings contract. For comparison, this is how it looks in other countries:
- Austria 61%
- Czech Republic 48%
- Slovakia 22%
Building savings and inheritance of building savings contract
The best known tariff at a building society is the standard tariff as a bauspar contract. Furthermore, the fast savings tariff, the long-term tariff and the variable tariff are offered. The term of a building savings contract is about 18 to 20 years. However, the savings period for the savings amount is only eight years. The fixed savings interest rate is calculated on the basis of the building savings sum. The fixed loan interest rate is calculated on the basis of the nominal contract amount, i.e. not only on the effective loan amount alone. The bauspar is also divided into three phases. It starts with the savings phase. The contractually agreed savings amount is saved with the bausparkasse at a fixed percentage rate. If you want to increase your savings during this phase, you can do so. The time of allotment is thereby postponed. Anyone can bausparen and also has a legal right to a bauspar contract and this is also inheritable. Parents can conclude a bauspar contract for their children and bequeath it to them.
A minimum savings balance is required for the allocation of the bauspar sum, which is accumulated during the savings phase. The monthly savings in a building savings contract should amount to at least three to ten percent of the savings sum. It is possible to choose a quarterly or monthly payment method for a building savings contract. If the building savings stop and are not continued, the building society can terminate the building savings contract.
Allocation as the second phase of the bauspar contract
The savings phase is followed by the allocation as the second phase. During this period, the building society releases the savings amount for disbursement. The saver can have the credit balance paid out or have a corresponding loan paid out by depositing securities. However, there are some conditions for the allotment. Even when the savings phase is completed, the minimum balance must be saved. This balance is contractually fixed and is about 40 percent of the bauspar sum. However, the credit balance is not only the paid-in amounts, but also the capital-forming benefits, the interest and the housing construction premium.
For the allocation, the minimum contract period must also be reached. This is the period between the beginning of the building savings contract and the date of the earliest allotment.
The loan phase as the last phase of the building savings contract
The third and last phase of a bauspar contract is the loan phase. The missing amount at maturity for allocation is granted as a building society loan. In this way, the entire building savings sum is available for use in the case of building savings. The interest charged here is purely loan interest. The interest rate is not based on the money market. This brings many advantages, since the interest is not exposed to the fluctuations. In the loan phase the building loan is repaid. The repayment can be made in part or in full.
There is no early repayment penalty, as is customary with banks, in the case of building savings. If a loan is granted from the non-collective area, this is about 30.000 euros. Hedging is often not necessary. Such a loan is called a blank loan and can also be used, for example, for modernization of a rented apartment. In addition, a building savings loan is always an annuity loan with fixed interest rates over the entire term of the loan. Is redeemed initially with 0.2 to 0.9 percent. In many cases, coverage is provided by means of a term life insurance policy.
Use the loan for housing purposes
The date of allotment of the bauspar contract is determined by the so-called valuation number. Here, not only the credit balance per se is taken for calculation, but also the duration. A high valuation number is reached with the building saving, if either with the building saving a high credit within a short period or however over a long period a rather small credit is accumulated. If installment payments are made regularly, the valuation figure increases dramatically. If an existing balance is not saved, but left dormant, the valuation figure also grows, but in a linear fashion. The methods of calculation are very different among the building savings banks. Some evaluate the credit balances at certain points in time and others refer to the earned interest in the calculation. The individual rates offered at the Fund are shown in the formula used with a certain rate factor. However, it must be ensured by the building society that all customers are treated equally with regard to building savings. Accordingly, there must be no disadvantage or preference. The calculation is monitored by the Federal Financial Supervisory Authority (BaFin).
In addition, the savings amount may not only be used for the purchase or construction of a property. It is regulated by law that the building savings sum can be used for dwellings or buildings that are either improved, maintained, procured or constructed. Also the acquisition of a legal permanent use of housing is allowed. The buildings must also be used for residential purposes. Thus also building land can be financed, which is intended for the establishment of a building. Measures for the promotion or development of residential areas can also be covered with a building savings sum. In this way, liabilities can also be discharged which were raised for the implementation of the purposes already mentioned. It is also possible to redeem an encumbered plot of land if it is intended for the construction of a building to be used for residential purposes.
Basically, the building savings contract with a building society is a good way to obtain a favorable loan at permanently favorable interest rates for the purchase of a residential property. The conditions and interest rates are very favorable and cannot be compared to those of banks or other financial service providers. All residential and commercial construction projects can be covered by a bauspar sum. The monthly contribution can be kept very low, depending on the amount saved. Parents or grandparents often pay a few euros per month for their children or grandchildren, and the owner of the building savings contract with capital-forming benefits also pays and thus secures his interest. It is particularly advantageous that larger sums can also be paid in between. Thus, the allotment is achieved much faster. A home loan was commonplace in earlier times when a child was born to provide him or her with a good foundation for homeownership in adulthood. The building savings contract is also very fashionable again today, because the conditions simply convince everyone.