What makes building savings smart?

There are so many things. You have already learned from us how such a building savings contract works. And now let's look at the pros and cons. Admittedly, in times of extremely low construction interest rates, a home loan and savings contract was only one thing in comparison – too expensive. But since interest rates have increased noticeably during the year, building savings is becoming more and more attractive. For some it can be at present even the only possibility to still fulfill the dream of the own house or the own dwelling.

The advantages of building savings

If you take out a building savings contract, this has the advantage that you know from the outset exactly what costs you can calculate with. Because both the monthly savings installments and the interest on the saved balance are fixed at the beginning of the contract. When your building savings contract is ready for allocation and you get your money paid out after the savings phase, the loan phase begins, in which you pay back your loan – i.e. the difference between your savings amount and the amount you actually need for your loan. Here, too, the repayment and the interest conditions are already fixed at the beginning of the contract. And until you have paid back your loan in full. So you have total planning security from start to finish.

You need the money now?

No problem – at the moment, a building savings contract can also be a good alternative to a normal real estate loan. Because with the so-called building society advance loan, you can already dispose of the full loan amount at the beginning of the contract. Instead of repaying immediately as with a real estate loan, however, you first save money on your building savings account up to a certain amount as usual. Only from a certain accumulation amount does it enter the repayment phase. This is what makes building savings contracts so interesting at the moment, because with certain contract constellations you can immediately dispose of the money from the loan and benefit from the (still) relatively favorable interest rates.

Another advantage of building savings is that you can make unscheduled repayments at any time during the loan phase – and in any amount. This is particularly interesting if, for example, you later receive a salary increase and are in a better financial position than at the beginning of the contract period. The more you make special repayments, the shorter your loan period will be.

The state also supports savers with so-called capital-forming benefits (VL) or "Wohn-Riester". Although these grants are manageable, they are better than nothing. For young savers between 16 and 25 years there are additional bonus payments.

If you don't want to buy a property, but need money for modernization, building savings contracts are under 50.000 euros is also often cheaper than a mortgage loan or an installment loan.

The disadvantages of building savings

With classic home savings, the interest rates on loans are currently still comparatively low. However, it is the credit interest in the savings phase, so on the money that you have already saved also. However, this should change in the future and you will get higher interest rates on your savings. For some, it is also unfavorable that the maturity of allocation, i.e. the point in time from which you may dispose of your building society loan, can usually not be predicted exactly. This has to do with the special construction and the collective idea of building savings. However, if you opt for a bauspar advance loan, you can dispose of the money immediately.

You should know, however, that bauspar loans usually have to be paid off more quickly than normal real estate loans. This increases the repayment in the loan phase and your monthly installment can be correspondingly higher.

Another disadvantage is that you have to pay a signing fee to the building society when you take out a building savings contract. Depending on the loan amount, this can be between 1% and 1.6% of the building society sum.

Conclusion: In times of rising interest rates, as we currently see, a building savings contract can be a good and attractive alternative for your real estate financing. By the way, you can also conclude a bauspar contract in a financing mix with an annuity loan. Which variant is the most favorable and sensible for you, can be best calculated by a good and independent financial advisor.

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