Home financing with interest loan and Riester or without Riester

From my own experience, I would rather advise against the Riester stuff.

I took out a contract 15 years ago. At that time, there was only the normal pension. Endless hassle when circumstances changed, reporting salary every year, then the insurance lost track of properly reporting my children to the ZfA – ergo, there was no child allowance, but my contribution was reduced by the amount of the child allowance, so I paid too little, and "my" allowance was also reduced. And the allowance or tax benefits are the only thing that even makes this scheme worth considering.

Anyway, I have now withdrawn the capital for house construction. That is paper bureaucracy at first, it takes months until you have the money. And now the ZfA asked me to submit the documents to prove the intended use (that's okay, but more paperwork...). In any case, it turned out that the payout according to the ZfA is almost twice as high (!!!) as what I actually received from my provider. I am now in the process of finding out where this discrepancy comes from. Woe betide if the provider has pocketed almost half of it... (Commission and administration need to be paid!) That would completely negate the whole intention, in my opinion... I would have been much better off just putting the contribution in an account every year.

And finally: I now have to live in the house "forever," because the subsidy is only available for owner-occupied properties, or I have to repay the allowances. (Alternatively: buy a new property to live in) And what I will end up having to pay in taxes on the housing promotion account, no one can estimate today.

My conclusion: a lot of effort, very little benefit, lots of paperwork, permanent restrictions.

And generally, I would also get an ordinary annuity loan offered. With every euro you repay there, you save interest – whereas a building savings contract with practically zero interest on the balance (I have one from 2018 with 0.01%) means you pay interest on debts on the one hand while having funds lying around on the other. You have to calculate very precisely whether it is worth it.
If the girlfriend also earns, then credit and income are in a reasonable relation to each other, I think.

Why is the effective interest rate so much higher with a regular loan? With the [Bausparvertrag], it can be understood because of the fees. Definitely leave [Riester] out of the mortgage financing. It makes the whole thing inflexible and the costs unpredictable. If you want, you can take out a regular [Riester] contract. The [Bausparvertrag] is a bet on rising interest rates and today only pays off in special cases. First, interest rates are very low and will remain so for a few more years. Second, many banks offer fixed interest rates for 20 or 30 years.

Hello, the problem with the annuity loan is that you only have a fixed term of 20 years. With the building savings contract, at least the follow-up financing is "secured." Regarding Riester Whether the 2% interest rate is already factored in here and if it is really only 15% in the retirement phase (seems quite low to me) as well. You also hear a lot about paperwork and much uncertainty, but first, there is an amount x on a sheet that you receive, and without Riester, you would get nothing back. Is there a reliable Riester return calculator?

Hello, the problem with the annuity loan is that you only have a fixed rate for 20 years. With the home savings contract, at least the follow-up financing is "secured"

There are also plenty of banks that guarantee you 30 years.

Regarding Riester Whether the 2% interest is already included here and it is really only 15% in the retirement phase (seems quite low to me) as well. One also hears a lot about paperwork and many uncertainties, but first there is an amount x on a sheet that you get out and without Riester you would get nothing back. Is there a reliable Riester return calculator?

Where are you thinking... transparency in a financial product! That would be even better. Then you could compare! Ridiculous... but without sarcasm: Unfortunately, in my search I was unable to find a calculator that also calculates the unpleasant sides of the Riester contract. That is mercilessly sugarcoated, everyone only gives the answer "yeah yeah, that is somehow taxed later... it probably adds up." Nobody wants to just write down the numbers. I did it for myself once in an Excel spreadsheet... the result was disastrous.

There are also enough banks that guarantee you 30 years. Where are you thinking... transparency in a financial product! That would be even better. Then you could actually compare! Ridiculous... but without sarcasm: Unfortunately, I couldn't find a calculator in my search that also calculates the unpleasant sides of the Riester contract. That is mercilessly sugar-coated; everyone just gives the answer "yeah yeah, that will somehow be taxed afterwards... that will definitely pay off." Nobody wants to write down the numbers. I did it for myself once in an Excel table... the result was disastrous.

But where is actually the "Riester catch"? You can't really be taxed more than you paid in, and there should always be a positive result. Or have I still not understood Riester, difficult financial world

But where exactly is the "Riester hook"? You actually can't be taxed more than you have paid in, and a positive result always remains. Or have I still not understood Riester, difficult financial world

I don’t want to get too far out on a limb, so everyone is warmly invited to correct me. But my understanding: Subsidy in year 1: €1000 30 years until retirement, annually compounded at 2% on the subsidy account results in €1800 after 30 years. Tax rate in year 1, because full-time: maybe 30%? = 1000*0.3 = €300 taxes Tax rate in 30 years, because retiree, maybe 20%? = 1800*0.2 = €360 taxes Accordingly, it can happen that despite the lower taxation in old age, possibly EVEN MORE taxes have to be paid than before. Well, as you say, in the end there is of course a positive contribution from the subsidy. But it is by no means as high as suggested, which then in combination with the much more expensive conditions and the acquisition costs leads to a real loss.