This is how a building society contract works - simply explained

The home savings contract works in a fairly simple way. It is one of the most popular investment models. In this article, we have summarized how building savings can be done.

The building society contract - this is how the principle works

If you don't have enough of your own money, it will be difficult for you to get a loan from the bank. Here it makes sense to use the building society contract as an alternative.

• In principle, building savings is based on the principle of commonality. It pays a large group of people into a community fund. So one enables the other to buy a house or apartment, or the loan for it.
• The assets saved in this way receive the best possible interest. The state provides grants in the form of grants. The state also benefits from the construction and purchase of apartments and new houses. He even does this in a variety of ways. Through the taxes of the handicraft businesses, the property tax and some other things that drive the construction industry.
• When the saving phase is over, the building societies grant the member of the fund a loan, which in turn is financed from the common funds. You can also have your paid-up assets and interest paid out directly. The prerequisite for this is that runtimes must be observed. Read more in the second section of the article - the details.

Details of the building society contract

The building society contract is defined in two phases.

• The saving phase: You conclude a contract with a building society of your choice. It specifies the planned savings amount, your monthly savings rate, your interest and your loan amount. Then you pay your installment or savings amount. It is best to deposit these monthly. You receive interest for your growing assets from the respective building society.
• The loan phase: If the amount agreed with the building society is saved, you have the opportunity to get a loan from your building society. So you can buy a house or an apartment. From the start of the loan allocation, you pay off your loan in installments. This usually takes place in monthly installments. Here you will receive government grants. However, there is also the possibility, as with a savings book, that you have your saved money and the interest accrued up to that point paid out. The conclusion of a building society contract does not oblige you to take out a loan with the building society. What you should pay attention to when paying out the home savings contract can be read in another article.