Building savings loan or annuity loan? Difference?

Hello everyone

I hope I am in the right place..

Can anyone possibly help me here? I am facing the decision of home financing. I now have the choice between financing through a building society or Bauspardarlehen and a "normal" annuity loan.

Can someone here explain the difference relatively simply and maybe give a personal tip on what is better?

I know, for example, that with a Bauspardarlehen payments are made into a building savings contract, which then repays the loan amount - right?

Many thanks for your help

mik

Hello Mikhael,

Types of loans

One distinguishes between mortgages with direct repayment and fixed loans, where the repayment is made in one lump sum at a specified time through a repayment substitute (e.g. building savings contract, life insurance, or investment funds) (so-called fixed loans).


Mortgage with direct repayment

[*]The interest burden within the monthly payment decreases, the repayment amount increases, through ongoing payments directly into the loan
[*]Continuous repayment
[*]Interest is always calculated only on the remaining loan balance.
[*]Repayment rates are usually freely selectable and only limited by your capacity to pay
[*]Higher interest rate risk (after the agreed fixed interest period has expired, approximately 12 to 13% has been repaid) the remaining amount must then be extended at current conditions.
[*]The repayment loan (repayment mortgage) is also called an annuity loan. You pay the same monthly amount for 10 years. Within this amount, the interest decreases and the repayment portion increases.
[*]Term approx. 33 years at 1% repayment

Fixed loan

Fixed loans are characterized by the fact that no repayment takes place during the agreed fixed interest period, but only afterward, either through a building savings contract, a life insurance policy or an investment fund.


Mortgage with building savings contract

[*]Government subsidies (housing construction bonus, employee savings allowance - income-dependent!)
[*]Capital-forming benefits can be included and thus reduce the financing effort
[*]Flexibility through the possibility to make special payments into the building savings account at any time
[*]Lower interest rate risk after the first 10 years
[*]After expiration of the agreed fixed interest period, direct repayment by allocation-mature partial building savings sum
[*]Calculable, fixed repayment rates and fixed interest rates after allocation
[*]Contract fee 1 to 1.6% depending on the building society
[*]Interest is paid for 10 years on the original mortgage amount. For this, the saved building savings balance usually earns 1-3% interest depending on the building society and tariff.
[*]Term approx. 28 years

Best regards

M. Thiemann

With a building savings contract, you usually have to save first and after allocation, you can receive the building savings loan, which you then repay normally, but usually with a high repayment rate (if you can afford it) and are then free of your debts earlier. Then there are some tricks, but they do not always pay off. A normal construction loan is currently hardly more expensive in terms of interest, but due to longer terms, the monthly burden is lower.