Building society savings – everyone knows it, many have financed their home with a home savings contract and others still have it.
Both the state and many employers offer additional subsidies. This is also the reason why the Lending Matters contract is still very popular. But where does the idea of Lending Mattersing actually come from and how does a Lending Matters contract work in detail?
History of building savings
The city of Birmingham in England experienced enormous population growth in the age of industrialization. Housing had to be created. To finance the construction of houses, some residents founded in 1775 in a tavern, the “Ketley’s Building Society”, the first building society. The idea behind it was as follows: Every month members of the Society paid an amount into the fund each month to gradually finance each one’s home from the accumulated sum. As a result, further building societies were founded. In the years 1782 to 1795 there were 19 of them in Birmingham alone.
In Germany, this trend continued 100 years later: in 1875, Pastor Bodelschwingh founded the first German building society in Bielefeld, the so-called “building society for everyone”. In Germany, the coffers experienced their boom, as the housing shortage was particularly pronounced due to the first and second world war. From 1924 to 1934, around 400 building societies were founded, of which some still exist today.
How today’s Lending Matters contract works in Germany
In 1973, the Lending Matters One and the Lending Matters Two came into force, which regulate the home savings market in Germany to this day by numerous regulations. Since then, the building societies have been the linchpin of collective savings. You have the following tasks:
- They take over the organization
- You keep the accumulated sum
- They allocate the loans
A home savings contract is basically about saving equity in order to afford the financing of a home. In a contract, you specify in advance a sum that you want to save. The monthly paid contributions are interest. Once you have saved the agreed amount, you are entitled to receive a loan. The amount of this sum will also be contractually agreed in advance. After payment of the loan you pay no more savings rates, but rather the repayment of the building loan.
Basically, then: In a first step is saved, in a second step is paid. The goal is to be able to finance a property even without initial equity capital.
In summary, there are three phases in building society savings:
|phase||They regularly deposit funds into the capital fund and receive interest.|
|allocation||As soon as you fulfill various conditions, your home savings contract is ready for rationing.
– You must have reached a minimum savings amount.
– You must have adhered to a minimum saving time.
– An evaluation number must be reached. (This is dependent on the tariff and agreed in the contract.) On the basis of this number, the order of allocation is decided – the higher the rating, the more important the allocation).
– It depends on the allocation period : The Lending Matters contracts are each controlled to a key date, after which the decision is made on the allocation. If the target rating has not been reached by then, you must wait for the next key date.
|loan phase||In this phase, you will receive the entire Lending Matters sum that you can use to finance your property. After that, you will no longer pay any savings, but you will repay the loan in the form of a monthly installment for a fixed term.|
As a savings partner, you can obtain capital-building benefits from your employer in addition to the home savings and loan agreement. In this context, the state supports you with a worker savings bonus and a housing subsidy (insofar as you do not exceed a certain income threshold).
Building savings contract for the purchase of a property use
For those who want to use a home savings contract for the purchase of a property, the Lending Matters contract brings several benefits:
- Although the interest rates are low during the accumulation phase, the subsequent mortgage loan is usually relatively low-interest. In addition, the amount of interest is fixed from the beginning. In this respect, they have a hedge against rising interest rates during the contract period.
- Under a home savings contract special repayments are possible at any time, with some rates, you can replace the loan even without notice after allocation. If, in the meantime, you have a larger amount of capital, for example through a legacy, you have the opportunity to become debt free faster.
Please keep in mind, however, that in the case of a home savings contract, termination fees generally amount to between 1.0% and 1.6% of the Lending Matters sum. In addition, account management fees may apply in the saving phase.
You are looking for a mortgage lending, in which you want to bring in your existing home savings contract? Then we will gladly arrange the appropriate financing for you. Through our cooperation with over 150 lenders, we find tailor-made financing for you.