Bausparvertrag
(Housing-and-Savings-Contract)
A “housing and savings contract” is a contract that combines a savings agreement with a real estate loan.
To understand this product, it is best to realize that you are, in effect, dealing with three products:
An Annuity Mortgage with zero principal repayments and a fixed interest rate.
A savings contract in the same amount. Instead of repaying the mortgage each month, the repayment portion of the monthly rate is used in the first phase towards reaching the savings goal required by the savings contract (30-50%).
A Bauspar Loan. Once the savings goal of the savings contract is reached, and you are eligible for pay-out, the savings and a new Bauspar Loan are used to pay off the annuity mortgage. This Bauspar loan is, in turn, repaid at a previously agreed interest rate until the loan is fully repaid. In other words, you can fix the interest on your mortgage until it is fully paid off.
So, the main advantage is that the interest rate is fixed over the entire period.
But there are drawbacks. These contracts have upfront fees, the savings contract pays low interest rates, and there may be, in some cases, an interest rate gap between the Annuity Mortgage and the Bauspar Loan. Hypofriend has, therefore, built calculators that allow us to evaluate all the costs, and it makes sense for you.
