Construction financing with or without a building savings contract, experiences?

Hello dear forum,

I would be interested in your opinions/experiences.
Are there perhaps people who are currently also thinking about financing and asking themselves the same questions?!
Should one - as of today - secure the outstanding loan balance with a [BS]?
Is it even possible to take out a pure annuity loan in good conscience?

Total construction costs approx. €415,000
Plot 1050m² (fully paid): current standard land value €125/m² = ~ €130,000
Loan amount €300,000
Both at the end of their 30s, no children (and none in the future)
Net income €4500

The pure annuity loan was offered to us as follows:
3.89% nominal interest / 3.98% effective annual interest
2% repayment
Special repayments 5% possible
The outstanding balance in our case would amount to €225,000.

As an alternative, we could include a [Bausparvertrag] in several variants, with different allocations.
Would you play it safe and secure the outstanding balance with a [Bausparvertrag]?

I would appreciate your feedback.

As an alternative, we could include a building savings contract in several variants, with different distributions. Would you play it safe and secure the remaining debt with a building savings contract?

What fixed interest period does your annuity loan have - only 10 years? Will you actually make the special repayments? What is your expectation of an interest rate at the end of the fixed interest period, or how could the interest rate develop and what would be bearable? I personally am generally not a fan of building savers, but would rather consider a longer fixed interest rate or higher repayment. You have a monthly income of €4,500 and can only pay a rate of not even €1,500? What are you doing with the other €3,000 each month - you can’t spend all the money every month and at the same time worry about your debts in the future.

Calculate it for yourself. To secure the entire outstanding debt in 10 years, you need a home savings contract with ~1000€ monthly deposits. Besides the regular installment, mind you. These deposits are interest-bearing at 0.(0)1%, depending on the BSK. Meanwhile, you pay 4% interest on your regular loan. That's a pretty bad deal. The home savings contract would have to make that up again during the loan phase. But it has two problems: first, it only applies to part of the outstanding debt of ~120k, the other money you have saved yourself. And second, you have a high repayment in the home savings contract and therefore only benefit from your great interest rate for a short time. Better put the money into special repayments; that way, you also save interest.

Should one - as of today - secure the outstanding loan balance with a BS? Is it still possible to take out a pure annuity loan in good conscience?

You can definitely still take out an annuity loan with a clear conscience. I would do that in your situation as well. Inflation depreciates the debts quite well, but incomes increase with inflation. This way, you will be able to compensate for higher interest rates if necessary. You could also extend the term. Although I would not recommend a term extending into retirement. It’s really a question of how you assess yourselves and your income. Will it still increase, is there room for growth? Or are the prospects at the end of your 30s such that you have reached the end of your career and are rather worried about age, illness, and unemployment?

It depends on how risk-tolerant you are. In our case (2015!!!), the home savings contract combined with a 10-year loan was worth it because we got an extremely low interest rate for the short term, but 10 years is somewhat short without interest rate security. Today I am glad about it. In 1-2 years, it will be about refinancing for us. The home savings contract only really pays off if the interest rate at refinancing is significantly above the level of the secured rate. Otherwise, it lets you sleep more peacefully. But it is also quite easy to calculate how much interest you would pay in euros for the different setups. For us, that makes a 40k difference. We were lucky!

Hello everyone,
first of all, thank you for the answers. I didn’t expect this so quickly.
To begin with, our tendency has always been towards a pure annuity loan.
The fear mentioned here is also somewhat stirred up (by the bank/building society advisor) ;-)

I will try to address the questions.


The loan would have a fixed interest rate for 10 years, exactly, and 5% special repayments per year (possible).
To what extent this will be used later will depend on time. It depends on how realistic our calculation is (including ongoing costs).
"Throwing the money out" is well put. We have no ongoing loans or expensive hobbies, if that was meant by it. We have normal fixed costs, insurances, living expenses that one usually has. Of course, there is still some surplus, but that is intended as well. We don’t want a calculation that balances out to zero.
If you live reality once in a while, you can of course use the surplus as a special repayment.

By the way, we received a rejection from a bank, where they calculated house ancillary costs at €4.5 per m² (it will be 130m²), living expenses for 2 persons €1600, the rate was ~€1600. Assuming that in 10 years the interest rate for the follow-up financing might be at 5.8%, no offer was made to us there. Despite the fact that we are well positioned with land and equity. That’s tough ;-) And it unsettled us, I must admit.

I am paid according to the collective agreement, so I have continuous salary increases. My husband also receives raises every 2-3 years. We certainly won’t be making huge leaps anymore, but there is still some room for improvement.

When you leave the advisory talks, you briefly feel that you actually do need "the interest rate security".
Thank you for your opinions, I see it similarly.