BaFin

Home savings (Bausparen)

The purpose of home savings (Bausparen) is to save up to purchase or maintain (renovate, extend or modernise, etc.) residential property. In Germany, only building and loan associations (Bausparkassen) are authorised to conduct home savings business. For this purpose the building and loan association organises the pooling of many different savers into a special-purpose savings association (Zweckspargemeinschaft).

It is ultimately this solidarity of home savers that makes it possible for the individual saver to realise his project on the most favourable loan terms possible. This creates some special requirements for executing a home savings contract, setting it apart from e.g. a normal savings plan.

Questions & answers

Can I terminate my home savings agreement before it is allotted?

A home savings agreement may be terminated at any time. However, the home savings balance is only paid out after a few months at the earliest. The repayment date is specified in the general terms and conditions for such home savings agreements. Also, the benefits of the state savings incentives may be lost if the home savings balance is not used for residential purposes.

What is a prefinancing loan/a bridge-over loan?

These loans are linked to a home savings agreement.

A home savings agreement reaches its allotment maturity only after a certain period. However, if the home saver purchases e.g. a piece of real estate at an earlier date, credit institutions grant prefinancing loans or bridge-over loans. The purpose of such loans is thus to bridge over the waiting period applying before the home savings loan is taken out. During the term of the prefinancing loan or bridge-over loan, the home saver pays interest on the loan while at the same time accumulating savings in his home savings agreement.

Specifically, the term "bridge-over loan" is used when the home saver has already accumulated the minimum home savings amount but the home savings agreement nevertheless has still not been allotted. The term "prefinancing loan" is used when the home saver has not yet built up any (or only little) home savings capital.

When the home savings plan saved in parallel is allotted, the prefinancing loan or bridge-over loan is automatically redeemed by the home savings capital and the home savings loan.

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