Is a building savings contract still worthwhile currently/for future renovation measures?

Hello everyone.

Thought: a small 20,000 building savings contract, serviced monthly with 100,-€, ready for allocation in about 8 years for later remodeling/modernization/maintenance measures/special repayments - or other - if the bank cooperates ;-)

With a corresponding tariff with a later low nominal interest rate of around 2% effective, you have to accept a low credit interest rate (0.5 - 1%), plus the 1% closing fee and usually annual fees.

Overall, the costs during the savings phase even exceed the interest earnings - I only benefit in 8/9 years from a favorable loan. I personally assume that interest rates will be higher again in 8/9 years.

Now the question arises whether the "capital destruction" during the savings phase is compensated by the low interest rate in the repayment phase.

Otherwise, I can take out a savings plan (nothing speculative - it should be comparable to the building savings variant) for 8 years - currently perhaps averaging 1.5 - 2% for 8 years - and then take out an annuity construction loan of 10,000,-€ at the applicable interest rate.

What do you think or which variants do you suggest?

Best regards

Hello Cascada,

sorry, unfortunately my crystal ball is currently in inspection... :cool:

Seriously, as of today no one can reliably predict what the situation will look like in 8 to 9 years.

You are absolutely right, a building savings contract is currently not economically worthwhile during the saving phase - although you still get quite decent interest (compared to other savings products), the fees usually eat up the returns again.

During the saving phase you are probably better off with a classic installment savings contract with bonus interest.

However, if interest rates in 8 - 9 years are significantly higher than today (which I also assume), a building savings contract with today's low loan interest rates would of course not be to be despised.

You therefore have to decide for yourself what is more important to you:

- Secure low loan interest rates in 8 to 9 years: Bausparvertrag

- Yield during the saving phase: bonus savings plan

Regards,

Dirk

Hello

you said it accurately. There is a negative return in the accumulation phase (one should also consider that interest rates will tend to rise). One should look into the future and ask what outweighs more. The lost interest now or the saved interest in the future.

Maybe a Riester contract from which you can withdraw funds is worthwhile. From a pure saving behavior perspective, a home savings contract is more sensible. I am the type that once a contract is being saved up, I don’t touch it. If I save alternatively with a daily allowance account, it always gets "borrowed" and "used for other purposes"

Tomorrow...

Thank you both for your contributions.

I tend to lean towards the building savings contract. Primarily because of the lower interest rate on the loan. A few euros every month don’t hurt and the money stays where it is and is not "borrowed or misused" ;-) And the planning security plays a big role, especially for me. That’s also how I handled the home financing.

I calculated a contract online from three major providers. Considering all factors such as credit interest, fees, and debit interest, after 14-15 years (8 years saving phase and 6-7 years repayment phase), there can quickly be a difference of almost €1,000!

Here, I will probably disregard my home bank. On the other hand, my banker assured me of the "most generous interpretation" regarding the purpose binding...

Best regards

However, if interest rates are significantly higher in 8 - 9 years than they are today (which I also expect), a building savings contract with today's low loan interest rates would of course not be to be dismissed.

In the end, it is purely a speculative business. I personally suspect that the key interest rates will go down to 0% and thus loan interest rates will continue to fall. (see Japan as a comparison) I personally currently prefer the strategy of taking advantage of the current situation in the stock market and extracting as much capital as possible from it rather than paying into a building savings contract where nothing comes out in the end. If you deal a bit with stocks, there is currently quickly 30% return in it... but of course also risk. In the end, it doesn't matter how you do it, pure speculation and one side will be right in the end.

Prokon ... a very hot candidate.... you quickly get a 10% return.... Oh wait... Too bad, your money is unfortunately gone. To quickly get a return with stocks, you have to know exactly what you’re doing. If you don’t, you need time and good nerves. The only time I wanted to invest in stocks was in 1999 in the Google stock... if only I had done that back then. :D