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 the mortgage you pay into a savings programme. The savings will then be used at a later stage to pay off the mortgage.

Only in the first form can you use this towards your mortgage as equity. The second form may be necessary if the bank requires another form of security down the road at the end of 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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