Risk financing regarding the timing of allocation of building savings loans?

However, it was not about rejection due to lack of creditworthiness, but rather that the building society contract is not precisely eligible for allocation after 10 years when the annuity loan expires. You yourself say that allocation cannot be guaranteed due to the system. The risk that this happens increases when many also draw down the building society loan. This occurs if the interest rate level has actually risen in 10 years.

Today, building society contracts are taken out to secure currently favorable conditions for the future. This purpose is absolutely new! For example, in the 90s, people had building society contracts to mitigate a high interest rate level through saving phases (and foregoing an appropriate return on the deposit). Since the 90s, the interest rate level has continuously declined to the current lows (a period of over 25 years!). I would argue that the majority of building society customers who concluded their contracts from around 1995 onwards did not draw down the building society loan because the interest rate level had significantly fallen during the saving phase. This will be different in the future, provided that interest rates actually rise.

Just as banks are currently complaining because old contracts guarantee comparatively high interest rates on customers’ deposits, they will complain in 10 years if in fact all building society customers want to draw down the building society loan. How quickly unscrupulous means—especially by savings banks!—will be resorted to can be wonderfully followed in the media in recent years. The business model only works if little has changed in the interest rate level between contract conclusion and allocation of the building society contract. If it has fallen, the bank struggles with the high guaranteed interest rates on deposits; if it has risen, they have to reluctantly lend money cheaply. The latter condition, historically speaking, has not occurred for quite some time (one must already have many years of service under their belt for that).

I would not enter into a linked building society contract unless the bank guarantees that the conditions of the annuity loan are guaranteed until allocation maturity. That this is possible has already been proven here in the forum. Everything else completely misses the actual goal (to secure interest rate conditions in the long term), as it creates new uncertainties that would not exist without the building society contract.

pure annuity loan and overall it was already 8,000 euros cheaper over the fixed interest rate period - which practically is not noticeable when calculated monthly.

Only 8,000€. Well, to each their own.

Local branch banks can also offer good conditions. The Sparkasse (?), which offers you the building savings contract, can also provide pure annuity loans. That they primarily pitch products that are mainly good for the bank would rather drive me away from there...

Well...

We are total laymen in banking, I can only take note of this for the moment. The more you deal with the subject, the more difficult it seems to become. This allocation issue was completely unknown to us until now and I already see it as a risk. The fact that interest rates are rising and that many people will probably want to draw on low-interest loans in 10 years is not an unrealistic scenario. And if you then have to finance a still considerable amount at perhaps very bad conditions, that is something a bank should mention in its advice. I find it incomprehensible that this did not happen.

Since you apparently have a lot of experience in this field: are you aware of cases where there were real problems because the building society did not want to pay out and the customers needed the loan?

Regarding "only 8000": it is by no means the case that having or not having 8000 euros would be indifferent to us. The difference is relative, however, since it adds up over the years and there is also the unknown that with the cheapest loan there is again no security built in through the fixed interest rates of a building savings contract, and if interest rates go badly, we might possibly need an extremely expensive follow-up financing.

During the savings phase, you accumulate so-called "evaluation points" (time and savings rate count as factors here). However, if the building society has an extremely large number of savers at the same time – that is, more than originally calculated – it must have the possibility to postpone the allocation if necessary. Building societies must calculate very carefully because they always have both parties simultaneously – the customers who are in the savings phase of their contracts and, of course, the loan customers.

Speaking from practical experience, I can say that with the pre-financing models the allocation is basically on time. "Basically" = clearly, there can be exceptions. But those are exactly what: exceptions.

Well, other factors also play a role in the evaluation number, for example, interest already received, but those are more nuances.

How long is your practical experience? Because here I must vehemently disagree, although I myself have not yet experienced it. You describe the problem correctly, but I suspect that you have never experienced a situation where interest rates have risen significantly, because that is exactly when hell and damnation break loose. Many customers use the building society loans AND new interim financings are expensive.

Simply speaking of exceptions here is too short-sighted. One must be aware of this problem AND be able to compensate for this situation for 3, 6, 9, 12 months.

Compensating can then only mean that I take out a new loan for the suspected duration of the actual allocation in the amount of the monthly installments x number of months that I have to bridge?

Correct, in the worst case a loan is needed for bridging, on which at least the applicable interest rates at that time must be paid. This may be more expensive due to the then higher interest rate level.

The risk therefore does not necessarily lie in the repayment part, but in the higher interest costs.

A 1% interest increase costs you almost 100 euros per month per 100,000 euros.

So... just a worst case.... 3% interest increase, bridging for 1 year with 200,000 euros, risk of 6,000 euros additional costs. So it's not necessarily fatal. You just have to be aware of it AND if necessary make provisions in case you cannot cover it from ongoing income...

Saving 6,000 euros over 10 years means setting aside 50 euros monthly.