Building savings contract and Wohnriester - Where is the catch here?

Hello,

I am currently facing the decision of whether to switch from renting to owning a home. At the moment, I am making inquiries at various banks and intermediaries and receiving advice.

It is not about specific properties yet, but about finding out whether acquisition is possible and what is possible.

My conditions:
As a single person, I am interested in acquiring a 2-room apartment. I have no equity and there is still an installment loan.

I take this information into the discussions.

So yesterday I had a conversation with someone from Wüstenrot who told me about a construct that in my eyes is too good to be true.

Since I am (still) rather clueless about financing, I would like to ask you what you think of it or whether you might even know this construct.

In short, I was offered to conclude a building savings contract and a Wohnriester contract.
The building savings contract would have a minimal closing fee of 500,- which corresponds to 1% of the building savings sum of 50,000 €. Furthermore, no savings obligation would exist.
I would have to fund the Riester contract with 60,- annually to "get into the subsidy" (advisor’s exact words).

With the conclusion of the building savings contract, a subsequent loan with a 30-year term would then be interest-bearing at 1.25%.

I understand this as me "buying" a loan with a 30-year term and the same interest rate lock-in period at 1.25% by paying the 500,- closing fee for the building savings contract.

Yesterday I asked at least 5 or 6 times where the catch would be or whether the whole thing had any additional conditions.

So, do you know this construct? Is it reputable?

Wohnriester has some advantages but also some disadvantages. For example, the keyword Wohnförderkonto was not mentioned?

No, was not mentioned

Well, the 60€ Riester only fills your advisor's commission pot; you won't be able to make any financing with it. What do you even earn and what amount of loan do you need? How high is the installment loan and what are you paying off on it? I think the broker just wants to push a Riester and building savings contract on you.

Well, that's what I'm afraid of too. The Riester thing isn't really that interesting, I'm mainly interested in the fixed interest rate over 30 years with this Wüstenrot building savings contract. As I said, there is no concrete financing plan yet, I just want to find out whether I'm in trustworthy hands or not.

There are quite a few options there.
Taking money out for building a house, with or without subsidies. Then the conditions to pay it back into the contract by retirement. Then there is the issue of how it is treated for tax purposes at retirement. What happens if you die before reaching retirement... What happens to the heirs?

And then actually the product invested in? Opportunities vs. risks? Guaranteed interest? Commission or front-end load with every deposit.
Children planned yes/no
Minimum deposit known and the issue of being able to pay in 4% of taxable income to receive 100% of the subsidy... That can "hurt" with a good salary

For us, that was tied to too many conditions and question marks.

In the end, we only took out a Riester contract for my wife to take advantage of child subsidies, and only the minimum contribution is paid.
But even here you have to be careful during the term. With us, R+V wanted to push us into a pension product better/easier for R+V (front-end load without great return prospects - and no management by the fund company) - a switch to a pension product only makes sense a few years before retirement to secure the accumulated capital... But not 30 years before retirement... We declined - as Finanztest also recommended in one of their issues

So far, the return on the equity product is great and the subsidies for the kids are on top...
Of course, always bearing in mind the deferred taxation upon reaching retirement age...