Basic idea
Bausparen is based on the idea of “help for self-help”. Put simply, a group of people join together and agree to pay a monthly amount into a common savings fund. By pooling their money, they can amplify their own resources. When one individual out of the group is ready to build or modernize a dwelling, she or he gets a loan from this fund. The loan repayments flow back into the fund, thereby insuring that funds are available for another member of the group to buy or modernize a home or flat. Bausparen is a closed system. It is independent of capital markets and their fluctuations. The advantage here is that it is completely calculable for bauspar customers. Moreover, savers and borrowers have a lot of flexibility in tailoring their payments to suit their ability to make monthly instalments. Bauspar contracts can only be offered by specialised credit institutions, the bausparkassen.
Bauspar sum | Savings | Loans
A bauspar customer concludes a bauspar contract for the desired bauspar sum. The bauspar customer thus commits herself/himself to regular monthly savings of between 0.3 and 0.7 per cent of the agreed bauspar sum. Once 40 to 50 percent of the bauspar sum has been saved and a specific minimum time period has been met, the bauspar customer has acquired a right to the bauspar loan. The loan usually paid out is the difference between the amount of saved capital and the bauspar sum. Thus, the bauspar customer can dispose of the entire bauspar sum for housing financing or housing renovations.
Allocation of the loan
The bausparkasse calculates a valuation number for each bauspar customer based on the savings sum and the savings period to calculate the ranking order of allocations. The bauspar customers with the highest valuation numbers are the first to be entitled to the allocation of the bauspar sum.
As a rule, allocation takes place as soon as the minimum savings sum is reached or shortly thereafter. The exact time depends on the amount of funding available to the bausparkasse. The funds of the bausparkasse consist of savings contributions, repayments of loans granted and interest on deposits.
Tariff diversity
It is not only a residential property that should reflect one’s personal taste—the path to it can be arranged individually and flexibly. The bausparkassen offer numerous tariffs to meet individual needs.