Bausparkassen offer an array of home savings plans, or Bauspar plans. The term of a standard plan including redemption is normally a maximum of 20 years. The home savings amount, known as the Bauspar amount, is contractually agreed between the saver and the Bausparkasse right at the start. It comprises the savings portion, in other words the capital contributed by the saver to the property financing, and the home savings loan that may be taken out, referred to as the Bauspar loan.

In the Bauspar plan agreed between the saver and the Bausparkasse, the following parameters are defined: the interest rates, i.e. the interest rates on the savings deposits and the loan, the minimum savings period and other conditions according to which the loan is granted, such as the minimum savings balance and the minimum valuation score (Mindestbewertungszahl) decisive for the allocation of Bauspar loans. Furthermore, at the time the contract is signed, the customer and the Bausparkasse determine the regular savings amounts, the interest and redemption amounts and the acquisition fee (Abschlussgebühr) to be paid by the customer.

For you to be granted the loan portion of the Bauspar amount (i.e. the Bauspar loan), you must also provide evidence of your creditworthiness and/or furnish appropriate collateral.

Only a Bausparkasse may conduct Bauspar business. A Bausparkasse pools a large number of savers to form a special-purpose savings collective known as the Bauspar collective. The objective of the Bauspar collective is to provide each of its members with a low-interest loan so that they can realise their projects. This arrangement gives rise to a number of special requirements when it comes to executing the Bauspar contract. These requirements differentiate a Bauspar contract from a normal savings plan.

For which persons is Bausparen best suited?

A Bauspar contract can form the basis of property financing for a later date. According to the German Bausparkassen Act (Bausparkassengesetz), the Bauspar loan must be used for residential purposes.

However, a Bauspar contract may also be used purely for savings purposes. Bear in mind, though, that the interest rates on the savings deposits for newly-agreed Bauspar contracts are lower than for other investment products.

One advantage of Bausparen is that the interest rates on the savings deposits and the loan are fixed for the entire savings phase and/or for the later phase of the loan redemption.
Whether Bausparen is a suitable means to finance your property purchase depends on whether you are able to claim government subsidies.

Which government subsidies may I claim?

Bausparen is subsidised by the German government. Depending on your circumstances, you might be able to claim a 9 percent employee savings bonus (Arbeitnehmer-Sparzulage) and/or a 10 percent housing bonus (Wohnungsbauprämie).

• Employee savings bonus – government-sponsored capital accumulation: As an employee, you can additionally claim a savings bonus in your tax returns if your employer pays capital accumulation benefits sponsored by the German government (vermögenswirksame Leistungen) into your Bauspar account. The bonus per employee amounts to 9 percent on annual savings contributions up to an amount of €470. For this, you must be subject to unlimited income tax liability and have a maximum taxable annual income of €40,000 (married couples: €80,000).
• Housing bonus – subsidy for your own savings: In order to claim the housing bonus, earners’ taxable income may not exceed €35,000 for single earners and €70,000 for married couples. Single earners may receive a maximum of €70 per annum on an annual savings amount of up to €700, married couples €140 on their annual savings amount of up to €1,400. Earners must save at least €50 per annum. A minimum age of 16 years applies for this subsidy (and includes school children and students). However, the housing bonus is only granted if you are actually buying, building, modernising or renovating a property. An exception applies to Bauspar customers who were under 25 years of age at the time the contract was signed. After seven years, these savers can freely dispose of the amounts saved, including the housing bonus, if for example they wish to finance household furnishings or buy a car.

Employee savings bonus and housing bonus at a glance

Is the balance on my Bauspar savings account protected?

In Germany, amounts accumulated during the savings phase are protected by the statutory deposit guarantee scheme up to an amount of €100,000 per customer. Amounts saved in excess of this might not be covered.

Where can I conclude a Bauspar contract?

You can conclude a Bauspar contract at a credit institution or a Bausparkasse. Information and advice can be obtained at the branches, online or by telephone at the respective provider.

But beware: the large number of offers and different Bauspar plans of the various Bausparkassen make comparisons difficult and complicate the selection process. The interest rates and conditions differ from one Bausparkasse to another. The institutions offer an array of contractual constellations and terms. Before signing a contract, be sure to check very closely which of the offers best suits your needs and whether the conditions in the case of a special offer really are that favourable. Take as much time as you need before you sign the contract in order to gain necessary information and seek advice.

Make a record of what you discussed and file this with your documents as the adviser or intermediary is not legally required to prepare and hand out a record of the advice they offered.

Every Bausparkasse charges an acquisition fee when a Bauspar contract is concluded. This serves primarily to cover the acquisition costs, i.e. the costs for gaining new customers. The amount of the acquisition fee is stated both in the application form and the terms and conditions for Bauspar contracts (Allgemeine Bedingungen für Bausparverträge – ABB). These terms and conditions must be handed to the Bauspar customer when the contract is signed.

What information must the Bausparkasse provide me with?

When applying for a Bauspar contract, you are given a number of documents containing contractual conditions and key information. In particular, the Bausparkasse is required to inform you about the conditions under the Regulation on Price Indications (Preisangabenverordnung) and explain to you the rules of the deposit guarantee scheme. For Bauspar contracts that are pension provision contracts within the meaning of the Pension Contracts Certification Act (Altersvorsorgeverträge-Zertifizierungsgesetz), i.e. home ownership pensions or “Wohn-Riester”, the Bauspar customer must be given a product information sheet (Produktinformationsblatt – PIB).

Other information obligations that must be fulfilled before the Bauspar contract is signed depend on the type of loan: if the Bauspar loan is being offered, as is usually the case, as a property consumer loan agreement (Immobiliar-Verbraucherdarlehen), the obligations that apply differ from those of general consumer loans

Which obligations must I fulfil as a Bauspar customer?

When you conclude a Bauspar contract, you agree to pay a regular savings amount each month. Sometimes a Bausparkasse will also accept lower savings amounts for a limited period of time. However, if you fail to pay the saving instalments in the agreed amount, the Bausparkasse may demand payment of the difference and might even terminate the Bauspar contract. Furthermore, you run the risk that the Bausparkasse might refuse to grant you the Bauspar loan.

When may I access the money in my Bauspar account?

You may only access the entire Bauspar amount (savings balance on the Bauspar account and Bauspar loan) after allocation of the Bauspar contract (Zuteilung). However, when you sign the contract, your Bausparkasse is unable to state the precise date on which the allocation of the Bauspar contract will be made and will only indicate an approximate timeframe. This is because a number of factors play a key role in determining when the Bauspar contract will be allocated. Bauspar customers can influence when they reach the minimum savings balance through their savings behaviour. But neither the Bausparkasse nor any of the savers will be able to influence how others who are grouped together in the same Bauspar plan will behave. For this reason, it is prohibited by law to name an allocation date.

You may terminate the Bauspar contract at any time before the allocation. However, the Bauspar savings balance will only be disbursed after a few months at the earliest. For more precise information, please refer to the ABB. Bear in mind that failure to use the Bauspar credit balance for residential purposes could result in the withdrawal of the state-subsidised savings benefits.

Are there any tax aspects I should consider?

In order to benefit from tax-free allowances, you can apply for a tax exemption at your Bausparkasse or credit institution.

How is a Bausparkasse supervised?

A domestic Bausparkasse requires authorisation from BaFin to conduct Bausparkasse business. German financial institutions are supervised by the Deutsche Bundesbank and BaFin and, if they exceed a certain size, also by the European Central Bank (ECB) within the scope of solvency supervision.

However, BaFin does not check whether an offer from a Bausparkasse or the conditions of a Bauspar plan suit your particular needs. The same applies to the interest rates being offered. BaFin is also not responsible for checking the contractual conditions from a civil law perspective.