What to Consider when Saving
Given the rise in interest rates on buildings, home savings are again in demand. What should be taken into account when concluding a contract for the provision of accommodation? What opportunities does it offer? Insight.
It used to be a safe haven, but now it’s an old paradigm: the home loan and the savings contract. However, it seems to be making a comeback at least since the end of the European zero rate policy. For 2022, the volume of contracts awarded is expected to increase by 40% compared to the previous year.
What are the Options Offered by a Home Pension contract?
Simply put, everything you need to buy in or around the house can be financed, including your garage, carport or fireplace. When signing the contract, you do not have to specify the purpose for which you will use the loan.
Thus, a housing provision contract can also be used to carry out energy modernization or renovation actions. A subject that many owners will have to deal with in the years to come. Contracts can also be transferred to third parties.
What should be taken into Account when Concluding a Contract for the Provision of Accommodation?
The most important thing: you should not overdo it financially and save only the amount you can really manage. Also important: When will the home loan and savings contract be ready for assignment? So when will I get all the money – i.e. the savings plus the loan. If I intend to buy a property at X time, the money should also be available if possible.
In practice, unfortunately, a very common mistake, as discovered by Stiftung Warentest. Many consultants simply miscalculated the timing of the allocation. Also, you should get various offers and not immediately sign the first offer that comes your way.
Can I also use a Housing Savings Contract to buy a Car?
You can also simply repay the housing savings contract on its due date and not use the loan. Buying a car or financing a trip around the world is certainly possible. However, one may wonder if this makes sense. Because the relatively high administrative costs of a housing savings contract are also paid on the so-called part of the loan. Additionally, you must repay any government benefits, such as the Housing Grant, if you are not using the money for a specific purpose.
What are the Disadvantages of a Housing Savings Contract?
There are high costs from the outset. Between 1 and 1.6% of total savings on home loans. In addition, the interest on savings is very low. In principle, this is the guaranteed interest rate on the loan. In addition, you have to save for a long time and then wait for the allocation.
State aid also depends on income. For example, you are only entitled to the housing allowance if you have a gross annual income of €35,000. Of course, saving isn’t the only way to invest your money right now.
What are the Alternatives ?
Not only are savings being rebuilt, but life insurance, for example, is becoming attractive again. This is called guaranteed interest and profit sharing. For a long time this completely disappeared. Industry leader Allianz Leben has increased profit sharing for 2023. Other service providers are expected to follow suit soon.
The subject of bonds will become more interesting again due to the general rise in interest rates. Here too, interest rates are rising. But the following applies here: Check exactly how creditworthy the country or company issuing the bond is. The more attention you promise, the more careful you have to be.