Building society savers: The combination of equity and building loan

 

In July 2015 alone, Agree banks provided more than 25 billion USD to private households for the construction loan.

An impressive number that emerges from the interest rate statistics of the Cream Bank.

Builders have probably put much larger sums into their own homes.

After all, families often bring equity capital. Part of the savings is likely to be in the home saver .

Hasn’t the building society contract been a thing of the past?
Where is far-sightedness needed from the client’s perspective?

Building society savers – credit and savings from a single source

Building society savers - credit and savings from a single source

At first glance, the building society contract looks somewhat antiquated and is getting on in years, given all the modern financing instruments.

However, there is a concept behind this that still applies in the 21st century when it comes to building loans. The home saver combines a comparatively low-interest loan with previous savings efforts.

The basic structure of the home saver is – despite the different products – similar. The savings phase begins after the home savings contract has been concluded.

As a client, regular payments are made to the contract – until the minimum balance is reached. When the allotment maturity is reached, the building society customer can not only use the saved credit. A building loan with an agreed interest rate is available for call.

Bausparer: It is now also available as a combination product

Bausparer: It is now also available as a combination product

The classic building society contract has one major disadvantage – the long saving phase. Five to seven years pass quickly here, which building society customers have to wait for capital. In the meantime, however, there are alternatives that rely on a connection between the home saver and an advance loan.

Here, the household closes a building society savers, but also takes out a bank loan – the advance financing. The latter immediately ensures liquidity. Generally sufficient as a maturity loan, only the interest payment to the bank flows during the term of the advance loan. The loan amount is replaced with the due service from the building society contract.

  • The latter is to be saved during the term of the advance financing. However, whether the combination of building society contract and advance loan really pays off does not depend so much on the monthly charges. Rather, it comes down to a detailed look at the combined lending rates. It often turns out that the total effective interest rate is borne by the borrower. Based on this situation, it is advisable to check all options at this point.

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