Building savings with a bullet loan in the cost trap

Proper financing

Building savings is not financing for the spontaneous. To get around this, building societies sell their building savings with a bullet loan. The building societies then advertise a fantastically low effective interest rate that will get you into your own four walls. Banks and building societies advertise building savings in this way or in a similar way. But be careful! With home savings, there is almost always trickery.

The principle of building savings with a bullet loan

Let's take a closer look at home savings as a form of financing. If you decide to take out a home loan, you will generally not be able to build a property immediately or. Buy. The reason for this is that a home savings contract must first be saved until it is ready for allocation. Because building savings means "save first, then build". The problem is clear. A building loan that cannot be used in the foreseeable future is not very popular. To get around this, banks and building societies offer so-called bullet loans, in connection with building savings. A bullet loan is intended to bridge the time of the savings phase for your home savings contract. The customer can immediately fulfill his dream of owning his own home with this bullet loan. If the home savings contract has been saved to the extent that it is ready for allocation, the bullet loan replaces the home savings contract. So far, so good. But there are a few snags.

What is the cost of building savings with a bullet loan??

In most cases, home savings with a bullet loan are significantly more expensive than a conventional bank loan. Why? In the savings phase, the customer has to pay both the interest on the bullet loan and his home savings account, ready for allocation. The credit in a building savings contract usually earns one or two percent interest. At the same time, the customer pays interest on his bullet loan. These are four to five times higher than the interest on the savings in his building society contract. The home savings contract cannot make up for this difference in interest rates. Not even through very favorable interest rates. This is one reason why home savings is not as favorable as is generally assumed.

Building savings is difficult to understand for a non-expert. But it gets even better. The effective interest rates quoted by banks and building societies are only half the truth. Let us give you a small example.

Mr. Meyer decides in favor of building savings. He gets a building loan from his building society of 100.000 euro. Mr. Meyer can buy his property and move in immediately. For this he pays 17 years and. 2 months a total installment of 739 euros. From an objective and economic point of view, it is only a loan contract. However, on closer inspection, there are two indications of the effective interest rate. 5% for the grace loan and 2% for the subsequent home savings loan. What do you think? How high is the effective interest rate in reality?? If you think that the effective interest rate must be between 5 and 2%, you have already fallen into the trap. The real effective interest rate is approx. 5.5 to 6%.

How costs are concealed in home savings schemes

The information on the effective interest rate conceals a number of additional costs that are incurred when saving with a home loan.. For example, a large part of the closing fee is simply not taken into account. In our example, this makes almost 50 percent over the entire term.000 euro from. This example shows us how far apart advertising and reality are. The bad thing is that almost all banks and building societies work with this trick. But there is still a glimmer of hope. The legislator has obliged the providers of state-subsidized riester contracts to disclose the actual effective interest rate.

Building loan tip bausparen

In order to make a financing comparable with building savings and a bullet loan, you need the following information. The offer should be made in writing. It should include the exact effective interest rate of the bullet loan. So show an effective interest rate for the entire building savings contract! It is important that the interest rate for the bullet loan is also fixed until the end of the term. Avoiding an unnecessary interest rate risk. You will also need a detailed repayment plan and a savings plan for the home savings contract. Only with this information can a financing with a similar term be compared between building savings with a bullet loan and a bank loan. If you take this building loan tip to heart, you will also be able to save for a building loan.