Redeem Riester home savings contract

Hello everyone,

we want to afford a property and besides the equity on daily allowance accounts, we also have the following home savings contracts:
- Fuchs home savings contract with 2.99% interest (loan, credit interest 1%): 2500 euros (20,000 one)
- Fuchs home savings contract with 2.99% interest (loan, credit interest 1%): 1500 euros (100,000 one)
- Riester home savings contract (interest similar, but the state's subsidies): 8500 euros (50,000 one)

I would like to keep the first two in order to have the chance to cushion a part of it after the fixed interest period expires (targeted 10-14 years), provided that interest rates have increased that much. I would halve the 100,000 one to 50,000, which is a pity regarding the closing amount, but my girlfriend was talked into such a contract. The corresponding amounts until the home savings contracts are eligible for allocation we would save (depending on the fixed interest period). Since there is not much credit on it and we have paid the closing fees, I am in favor of not including them in the equity for the mortgage loan yet.

Now about the Riester home savings contract. My girlfriend pays diligently and gets the "super" subsidy from the state, but has to pay taxes on that stuff later, etc. -> Personally, I work in the financial sector and am initially skeptical of such contracts. Basically, I have that thing tied to me my whole life. I would like to terminate the contract and use the money to reduce the loan.

That would presumably result in the already received subsidies being clawed back, is that correct? (So far, I have read differing opinions about the residential Riester).

If we continue the home savings contract and use it after the fixed interest period (at some point we basically have to use it...), we face the same scenario again, right? It is not guaranteed that we will ever take the loan from the Wohnriester. It then depends again on the market interest rate.

How would you proceed? The monthly rate is currently about one third of the net salary (assumption: one person full-time, the other on parental leave or 30-40% position, but at the moment both full-time and net salary is 7,500 monthly plus bonuses etc.). But since we are only entering with 10-20% equity (depending on the interest rate and investment opportunity) - I would like to use this Riester thing...

I would like to keep the first two in order to have the chance to cushion part of it after the fixed interest period expires (targeted 10-14 years), provided that interest rates have risen that much.

However, they must also be paid into in order to be eligible for allocation. In my opinion, the money is more beneficial to you in special repayments.

If you are planning for parental leave, you might want to have the Riester contract calculated. There are more allowances per child. As far as I know, the Riester rate can also be directly incorporated into the mortgage financing, but there are financial advisors or your bank who should be able to explain what is possible.

Hello,

if you cancel a Riester contract, only the paid-in balance will always be paid out, minus the proportional acquisition fee. Subsidies must be repaid and under certain circumstances the tax office can still demand the granted tax benefit back, but here contact with a tax advisor or tax office would be advantageous.
If Riester home savings or any other form of Riester funding is used in the context of house, construction, purchase, including direct payment into a Riester annuity loan, then the housing promotion account always arises, which is currently interest-bearing at 2% and accrues as a "tax liability" until retirement and must then be repaid.
However, one must also consider that from 2040 onwards, we will pay taxes proportionally on all income, statutory pension, Riester pension, interest income, company pension, rents, etc. So one should seriously calculate whether it might be better to live debt-free in the property for 10-15 years and save or set aside the installment or proportionally and pay off the tax debt at retirement with a discount, for example from another Riester pension.
Of course, you can use the Riester home savers. However, income, desired installment, overall financing, etc., etc. would have to be looked at closely. However, the loan can also be used without funding in coordination. Explaining this here would be too long and somewhat complicated, honestly.
You can also let the contracts accumulate normally, for example take advantage of the loyalty bonus and have the balance paid out as a monthly pension at retirement, possibly useful for the larger contract.

It is quite interesting how the advisor advised here. Normally, one Riester contract per person is sufficient and then adjusted accordingly. Moreover, the gross income also plays a decisive role here; if the net is that high, then it would be worth considering using the full €2,100 per year and taking advantage of the tax benefit. But such things would be more important and better in a proper personal conversation and calculation. You see, it was certainly presented as very simple, but in essence there are many points to consider. I hope I could help somewhat. Otherwise, please ask!

Have a nice Sunday and third Advent.