Building Society Under Scrutiny

A typical phrase in the consultation: “Just no Garan ! An acquaintance advised me against it. Since you pay only final fees and has no direct amortization. That’s not worth it! “We clean up with such prejudices and put the current building savings concepts to the test of real estate financing. In doing so, we take into account criteria such as total costs, interest rate security, term, monthly payment and flexibility.

The basic principle of Garaning


The basic principle in building society savings is interest rate hedging in the future by saving up to the allocation of the home savings loan . Depending on the respective tariff, the period until the allocation of the home savings loan varies in length. It essentially depends on the savings amount, the savings period, the loan interest rate and the repayment period of the loan.

Simple rule of thumb : the lower the loan interest , the higher the savings and the shorter the repayment period . The top interest rate for the loan thus means a high monthly rate and short term. Garan, like insurance, is a retirement product. Whether you really need it depends on the development of the future.

Building savings as a two-phase model

Building finance generally works as a two-phase model when it comes to mortgage lending . First you receive the desired loan amount as advance loan and pay for it a usually very favorable interest rate. Instead of a direct repayment as in the annuity a savings account to a Mindestansparung between about 30% to 50% of the savings will be filled by your savings rate. Your monthly installment is thus composed of interest rate and savings rate. The disadvantage over direct repayment loans is that you always pay interest on the initial amount and not the current balance. In the second phase , the home savings loan with guaranteed interest and fixed repayment triggers the advance loan. The clear advantage here is the always possible, unlimited Sonderentilgungsmöglichkeit. Partly also for the advance loan high Sonderentorgungsmöglichkeiten are offered.

The expert host on the independent consultant tells you about the total costs compared with the involvement of all factors exactly how high the comparison interest rate for an annuity with the same term and under what interest rate assumptions, a long-term hedge worth by a building society protection.

Attractive in the current low-interest phase can also be a loan- financed one-time payment instead of monthly savings. The objective overall cost comparison shows whether it is worthwhile or not. If a low initial monthly rate with simultaneous interest rate security is important until full repayment, then Garan models with maturities up to almost 40 years are almost unbeatable. Clear advantage, grow your financial opportunities in the future, you are faster with the financing through and need not worry about the interest rate risk.

Dangers in building savings


Long interest rate security does not necessarily mean long-term bondage. No matter which form of loan you choose, with the statutory right of termination , you can always cancel completely or partially after 10 years free of charge, but not the lender. Dangerous are the Garan models with only a partial coverage of the advance loan, with a low saving below the standard savings allowance. If the monthly rate is initially kept low, you have just completed a too high Baussum and paid too much closing fee. Attention also with home savings contracts with Wohnriester. The state funding is good and good but without comprehensive education on the downstream taxation of the tax-focussed tax account and the consequences in the case of sales should be avoided as possible. Often the danger of the allotment problem is summoned, but this misses the reality. Home savings loans have so far still been promised in accordance with the contract. Termination of the building societies were rightly pronounced only for misappropriated pure savings contracts but not for dedicated contracts with home savings loans.

If the financing is still in the future, a Vorsparvertrag is often offered. For future owners, this is usually limited. Only if the loan can also be allocated to the purchase or construction does the saving make sense. For a future follow- up financing is the Vorsparen unsuitable because you need the equity to buy.

And now?

There is no clear test winner . Which model is best suited for you, you will find in a sound and product-independent advice. The financing model must fit with you and your goals in terms of security, flexibility, monthly installment and overall maturity. Do not base your financing decision on prejudice, but clearly define your options and objectives. With open-ended consulting , your consultant will work with you to find the best financing solution for you, based on comparative calculations, regardless of whether it’s a building-society model or an annuity loan.

Do you still have questions about building society savings ? Or would you like more detailed information on mortgage financing, financing , subsidies or similar? Your JRM financial partner in Kiel, Hamburg and Flensburg is at your side from the initial consultation through to the purchase price payment. For JRM your wishes and possibilities are the focus of personal consultation.