How does a home savings contract work?

Hello!

Just a really silly question. Maybe not silly, I’m asking it out of pure interest.

I keep reading building savings offers like:

Bausparsumme: 50,000€
Nettodarlehensbetrag: 30,000€
Zinsen p.a.: etc etc....

Okay, then you have 80,000€

But you can’t buy a house with that!
Where do the remaining 120,000€ come from?
I wonder that every time I read something like this somewhere...

Greetings
Ramona

Hello Ramona,

I’m afraid you misunderstood something.

A building savings sum of EUR 50,000.00 consists of savings and loan.

In your example, this would mean that you first have to save EUR 20,000.00 within a certain period, then the building society pays out EUR 50,000.00 to you. The EUR 50,000.00 then consists of two elements:

- Your saved EUR 20,000.00

- The building savings loan of EUR 30,000.00

An "old" banker’s rule says that the ideal house financing looks like this:

- One third equity capital

- One third bank loan

- One third building savings contract

Therefore, a building savings contract is usually only one element of financing.

Best regards,

Dirk

For this, one must take out additional loans if no corresponding equity capital is available.

Mh, oh I see. We have €20,000 in our building savings contract over eight years. Would the bank then add another €30,000 so that we would have €50,000? Additionally, we save a fixed amount monthly, which would be an additional €40,000 over eight years.

That would mean:
Building savings contract €50,000
Equity €40,000

And we would get the remaining €110,000 as a bank loan? But that would be more than a third...

Mh, I see. We have €20,000 in our building savings contract after eight years. Would the bank then add another €30,000 so that we would have €50,000?

That depends on your building savings sum (see above) and the current valuation number of your building savings contract. Without knowing your contract, no one can say anything definitive here.

And we would get the remaining €110,000 as a bank loan? But that would be more than a third...

The one-third rule is only a recommendation; other ratios are of course also possible...

Best regards,

Dirk

The building society representative has "done" a thorough job so far. Maybe a small tip. Eight years ago, interest rates were by far higher. It may be more sensible not to use the building society loan and instead have the €20,000 paid out as additional equity. In some contracts, an additional interest was agreed upon if the building society loan was not used. However, this must be carefully calculated.