Can I use a German savings product as a down payment?

Almost one in every two German households has a savings product, called a Bausparvertrag. A Bausparvertrag (BSV) is a savings contract that is linked to a mortgage. It comes in two forms.

  1. In the first and most common form, the savings contract precedes the mortgage. Once you have saved enough you may become eligible for a mortgage loan at a preset interest rate.

  2. In the second form, instead of repaying (all of) the mortgage you pay (in part) into a savings program. The savings will then be used at a later stage to pay off the mortgage.

You can use s BSV in the first form towards your mortgage as equity. The second form may be recommended if you want to limit your interest rate risk (or if the bank requires it) at the end of the fixed interest period. The BSV in the second form would then be for a period longer then the fixed interest period. For a deeper look at how these savings contracts work, you can check out the following deep-dive article.

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