Building savings are the order of the day! This is not a recent phenomenon, but one that has been gaining ground for decades. There is hardly a young adult who does not base his first steps into self-employment on a building savings contract. But even older generations still like to use building savings contracts as a capital investment. The building savings contract has become an everyday phenomenon. However, this raises a doubly urgent question: what is building savings actually?? And how does the building savings contract work at all? This article gives a first overview!
The colorful world of home savings
© gina sanders | for many young adults, building savings is the first important form of investment. The main idea is to save from..
Building savings has a long tradition! Hardly any other form of investment has enjoyed such unbroken popularity over the past decades, overcoming even the most difficult of financial crises. Of course, this is not least due to the comparatively good savings conditions, which, in addition to the actual savings interest, also provide for a state subsidy on the savings efforts. And even if both values suffer individually from the current interest rate lull, together they still yield a worthwhile return.
But there is another phenomenon: the building savings contract is now firmly anchored in society as an institution. There is hardly a trainee who does not use a building savings contract to save the start-up capital for his or her first own car or for furnishing the new apartment. Also it cannot hurt to save with the building saver simply times on security, if some money is left for it. What would be easier? The building savings contract, it seems, is now simply part of life.
What is building savings?
The building savings contract is a financing model of the building societies, which is based on the idea of collective savings. In concrete terms, this means that many savers pay into a common pot of money at the same time, from which each individual saver is then gradually provided with a loan. The recourse to actually existing capital provides thereby comparatively good interest conditions at the market, which concerns the loan. However, a sufficient amount of savings must be accumulated before the first loan can be granted. After that, savings continue until it is the next saver's turn, and so on.
The special feature of the model is that the possibility to take out a loan first requires the payment of a pro rata amount of the contract sum agreed in the building savings contract (credit balance + loan) into a building savings account. After all, the loan is not paid directly by the bank, but is endowed from the paid-in capital of numerous other bauspar customers who are servicing a bauspar contract at the same time. This rate is usually around 30%. Individuals can draw on a maximum loan amount of 180 euros.000 euro access. For married couples this sum is doubled. The prerequisite, however, is sufficient savings, the necessary creditworthiness and a land register protection.
How the building savings contract works?
© bildergala | bausparer do not always offer the best interest rate conditions, and especially in low-interest phases, other forms of loans can..
A building savings contract is handled in three phases: a savings phase, the allotment phase and the redemption phase. In the savings phase, the aim is to first accumulate the minimum capital required to benefit from the low-interest loan. The required sum of money (at least 4 per mil of the contract sum/month) is paid either in monthly or monthly instalments. Annual installments are paid into the bauspar contract or invested as a closed account. The duration of the savings phase is at least 6 years in any case. Only when this time has elapsed and a sufficient savings amount has been invested, the entitlement to the allocation of a loan arises.
Once the minimum balance has been reached after the end of the savings period, the allotment phase follows. Here, the difference between the saved balance and the contract or. The bauspar sum is paid out as a loan. However, the disbursement of the loan takes place only with a time delay. This is because it is dependent on the collective pot of money having sufficient funds to provide for individual bauspar customers. This makes the applicability of the building society loan somewhat inflexible. However, the right to allocation of the bauspar loan can also be passed on in the family. In addition, it is possible to bridge the vesting period with an intermediate loan.
During the redemption phase, the loan is finally repaid again via an annuity. Depending on the amount of the loan and the monthly installment, this phase can last up to 30 years. Just as for the interest on savings, a dynamic model or a fixed interest rate can be chosen for the interest on the loan. In the latter case, however, unscheduled repayments are not easily possible.
In the actual contract, the credit institution and the saver negotiate the individual conditions that will determine the bauspar savings. This ranges from the targeted bauspar sum and a fixed interest rate to the term and monthly installments. For this purpose, bausparkassen offer different tariffs, which are adapted to different savings targets and different income levels. However, the interest rate on the loan cannot exceed a fixed upper limit of 6%. The bauspar contract is therefore less flexible, but on the whole more predictable than a dynamic bank loan.
Building savings as a form of investment
© gina sanders | with building savings, the money paid in is tied up for at least 6 years. It is therefore no longer at the free disposal…
The usual bank savings interest rate for building savings contracts is hardly higher than for other financial investments and is currently at a minimum level of around 1%. In addition, capital gains tax (kest) of 25% is applied to this interest income. Due to their special capital accumulation mechanism, which provides a reward for savings efforts from the state side, building savings contracts can nevertheless offer comparatively good interest conditions in total. Because in austria the state subsidizes deposits of up to 1200 euros per year with a building savings premium of between 1.5 and 4%. These are tax-free. Currently, in view of the international interest rate landscape, their value is admittedly only the minimum of 1.5 percent. However, the amount is determined from year to year.
The guaranteed subsidies on savings and the relatively safe form of investment led decades ago to the building savings contract being discovered across austria as a worthwhile alternative to the savings book. Throughout austria, building savings are used to save smaller sums of capital and then use them, together with interest, after maturity for larger investments, e.G., for the construction of new buildings.B. A car, to be used. Of the building savings loan thereby hardly use is made.
The bausparkassen have adapted to this situation and now offer, in addition to more loan-oriented tariffs, mainly savings-oriented models, which aim at the full absorption of the state premium, without paying special attention to the amount of the loan. Consequently, these building savings do not go beyond the maximum subsidized 100 euros per month. In six years, 7200 euros are thus accumulated, which can also be paid in full right at the beginning in order to benefit from savings interest on the entire balance throughout the entire savings phase. The state premium is paid out regardless only in steps, since it is counted only on maximally 1200 euro/year.
Note: building savings can also be taken out online. Building societies often advertise this option with the prospect of an additional lump-sum savings bonus of around 40.
Example: an investor would like to use the building savings contract for optimal premium payment. So, 100 euros/month is paid into the building savings over the minimum term of 6 years each time. The contract sum amounts to altogether 24.500 euro. Savings interest and the state premium are payable on the annual savings sum of 1200 euros. The building society advertises an introductory interest rate of 4% for the first year, but after that the rate drops to 0.5% per year. However, the investor is persuaded by the high initial interest rate. The state building savings premium is stable at 1.5%, but is raised in the last year and set at 2%.