Table of contents:

Home loan: how it works
Home loan: how it works
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A building society loan, also called building society loan, helps you to fulfill your dream of owning a home - whether new construction, purchase, renovation or modernization. We will show you how this financing method works. You will also find out which government grants are waiting for you.

Table of contents Table of contents home loan: how it works

  • What is a home loan?
  • Are there any fees for the home loan?
  • Contributing to real estate financing with a home loan: Who is it worth it?
  • Which government grants are eligible?

Table of contents Table of contents home loan: how it works

  • What is a home loan?
  • Are there any fees for the home loan?
  • Contributing to real estate financing with a home loan: Who is it worth it?
  • Which government grants are eligible?

What is a home loan?

A building society loan is part of a building society contract: It is a loan granted by the building societies, which according to the building society law may only be used for residential purposes - i.e. for the financing of modernization and renovation work, for a new building or for the purchase of a property. The spectrum of different building society loans is broad: Building societies offer their customers long-term loans with a savings and repayment phase of more than ten years - for example, to build a house or buy an apartment. Or even short-term loans with low loan amounts - for example, as a modernization loan for a property.

In the case of a building society loan, a large number of creditworthy builders use the solidarity principle to deposit money in one pot: as soon as the building society saver has reached a minimum amount of money, he has the right to a low-interest loan. Simply explained, a home savings contract runs in three phases as follows:

As part of a home savings contract, banks and customers agree on a specific savings period, during which the customer pays 40 to 50 percent of the home savings sum into the savings plan depending on the tariff - for most home savings and loan associations, the monthly savings benefit amounts to three to ten per thousand of the home savings sum. Interest is paid on equity. The amount of the savings rate and the following home savings loan are derived from the home savings sum agreed in the contract (for information: experts call the home savings sum the total amount of savings and home savings loans).

Good to know: With the help of special payments, as a home saver you can also increase your home savings credit more quickly. In addition, government subsidy programs (for example the housing construction premium) are advisable since the interest rates of the building societies are relatively low (see below).

The home loan is ready for allocation, provided the following requirements are met: On the one hand, the customer must have contractually agreed minimum savings at the specified minimum saving time - usually 18 months. The minimum savings balance is also influenced by the building society tariff. On the other hand, the valuation number determines the date of payment: The money saved and the savings duration are compared with the contractually regulated home savings amount and viewed in relation to the performance of other home savers. For you, this means: A short saving period coupled with a high amount of savings promotes the target rating number at the checkout. As a result, the home savers can look forward to an earlier allocation date, and thus to an earlier realization of their real estate dream.

If your building society loan is ready for allocation, you will be informed in writing by your building society. You can then accept the allotment in full and in part, postpone or refuse it: This means you can choose between paying out the amounts paid in or continuing to save according to constant interest rates. Attention: If you leave a contract ready for allocation for more than ten years, the building and loan associations can exercise their right of termination.

If you accept an allocation on an allocation date, the loan phase starts. The building society pays its customers (now: borrowers) the loan against a loan fee (approximately two to three percent of the loan amount). The difference between the agreed home savings amount and the home savings credit achieved defines the amount of the loan. It is paid off in a short repayment phase - between seven and twelve years. For this reason, the monthly money installments are relatively high compared to mortgage loans. The installments consist of the loan interest and the repayment - approximately 0.6 percent of the home savings sum. After the loan phase, home savers are completely debt free.

Good to know: If you want to pay the home loan quickly, you can usually make special repayments at arbitrary amounts.

Gebühren
Gebühren

Building societies are not allowed to charge an account maintenance fee, but some funds charge a surcharge.

Photo: Witthaya Prasongsin / iStock

Are there any fees for the home loan?

The Federal Court of Justice (BGH) has prohibited loan fees for home loan loans. The building societies are also not allowed to charge an account management fee for the building society account, which changes from the repayment to the loan account. Attention: Some health insurance companies charge a premium (agio), which increases the loan debt of the home saver. We therefore advise you to take this into account when choosing the contract.

Contributing to real estate financing with a home loan: Who is it worth it?

Whether a home loan is worthwhile depends on the current interest rate environment: if home and savings interest is currently at a fairly high level, the home loan can make sense.

In general, building society savers have to expect relatively low interest rates of 0.2 to 1.5 percent, but the building societies guarantee you a cheap building society loan - regardless of whether the interest rates are good or bad on the capital market. The amount of interest is agreed when the contract is concluded and always remains constant. This means that you, as a building society saver, have a fixed interest rate and do not have to worry about exchange rate risks - including long-term financial planning security! So if you want to take a small risk with regard to interest rate developments on the capital market, a home loan is an option.

Which government grants are eligible?

  • As part of the housing construction premium, the state supports building society savers up to a certain income limit. Advantage for young building society savers (16 to 25 years): After the allocation, they can freely determine the credit, often even get a bonus interest.
  • Attention workers! You get the employee savings allowance, provided that you incorporate capital-saving benefits into a home savings contract.
  • If you use the Riester building society savings contract for your own residential property, you will receive residential Riester. You can deduct the expenses for the Riester contract against tax.

For more information and authorizations, please contact your building society.

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