New advantages of Wohnriester: Clever savings, faster repayments

The right follow-up financing saves money. Riester building society savers can use their contract to replace the loan - and secure good conditions in advance.

Anyone who intends to purchase residential property is well served with the home savings contracts. Almost everyone knows that by now. Less well known: Riester building society contracts can also help with financing if the house or apartment was acquired a few years ago. So far, this only applied if the purchase was made after December 31, 2007. But even this hurdle has not existed since the beginning of 2014. Since then, it doesn't matter when the property was bought or built.

Timely research

Leon Hart recently learned how this works. The father of two children bought the dream house for the family in mid-2005. The Hart couple had already saved 100, 000 euros from the purchase price of 300, 000 euros, and they financed the missing 200, 000 euros. And because interest rates are historically low, the master craftsman asked about follow-up financing.

Good advice

The Cologne man is still pleased that his financial advisor had two good tips at the same time. The first: Instead of continuing to repay the loan directly, the expert advised him to sign the Riester building society contract. Specifically, this means that after the interest rate has expired, the loan is made repayable. In addition, a Riester building society savings contract is concluded. The future installments will then be paid on this building society contract.

High allowances

The Riester allowances also flow into the repayment as special payments. Since both children were born after 2008, the Harts receive 908 euros per year.

Big savings

If the contract is ready for allocation, home savings credits and loans are used to repay the loans and only the home loan is serviced. With an assumed interest rate of three percent, the family saves almost 10, 500 euros through the Riester effect. If the interest rate rises to four percent, it is even 11, 600 euros (see table "Planning early brings cash", enlarge with a click of the mouse). All costs have already been taken into account. This includes interest from loan financing and, among other things, the closing fee for the Riester building society savings contract.

Planning early brings cash

The key data: A family with two children born after 2007 bought a house in 2005, of which 150, 000 euros still have to be financed after the fixed interest rate expires in 2015. To do this, they can either extend the existing loan (alternative B) or use a new Riester building society contract (alternative A) - with many advantages.

* To ensure that the invoice is comparable, the same payments are assumed for direct repayment as for alternative financing with the Riester home savings contracts. This is a sample calculation, not a concrete offer for a prolongation.

** Funding requirements apply.

Photo: LBS West

Alternative A: The mortgage is made repayable. At the same time, two Riester home savings contracts in the Riester Home Flex 5L tariff are concluded with a home savings sum of 75, 000 euros each (home savings loan: 2.3% fixed interest rate, 2.87% effective annual interest rate from allocation including risk life insurance; example: 35-year-olds borrower, 45, 000 euros net loan). The Riester basic allowances of 154 euros each and child allowances of 2 x 300 euros flow in the savings phase as annual special payments also on the home savings contracts. In the loan phase, the allowances flow as special repayments on the home loan. Gross income of the parents 40, 000 euros each.

Alternative B: The mortgage is extended and continues to be repaid directly.

In this post you read:

• Save smart, pay off faster
• Get there earlier
• Expert advice