Residential Riester: Combi loans better than direct eradication

The Westfrust examined Riester-Baudarlehen in the December issue of the journal “AskFinance”. Riester real estate loans were tested with direct amortization and combinations of Bauspar contract and home savings loan. As a result, the combination loans performed better.

Cheap loan

Cheap loan

The experts of the Westfrust have praised the Wohn-Riester promotion unusually clearly. “Cheap does not go home” – this is the conclusion of the consumer advocates. Prospective owners not only benefit from tax advantages in the case of the subsidized acquisition of owner-occupied property. As the result of the investigation of financial test shows, the interest rates of residential Riester loans are often even lower than those of unfunded loans.

According to the test report, Riester loans from building societies are particularly advantageous. These consist of a loan and a home savings contract. For a loan of more than 150,000 euros, the most favorable provider demanded an annual percentage rate of interest of 3.29 percent pa The interest rate was set for 22 years. The benefits arising from the tax claim are also given to borrowers.

Low interest rates

Low interest rates

The offers of the building societies are very favorable not least because of the historically low interest rates. Because with the home savings loans, the interest rate is fixed for the entire term. In the case of traditional bank loans, this is also possible through a corresponding long-term fixed interest rate. However, the most favorable provider in the investigation, with an effective interest rate of 3.89 percent pa, demanded significantly more than the most favorable building society. 7 of the 10 Construction loan offers examined in the test were cheaper.

Combined loans are a combination of a home savings contract and a repayment-free real estate loan. First, a loan is paid out, for which only the full interest is paid and no repayment is made. At the same time, the borrower concludes a home savings contract in which monthly payments are made. If the home savings contract reaches the allotment date, the saved credit balance, together with the agreed building society loan, will be paid out and used to repay the first loan.

The term of such a construction extends mostly over 15 to 30 years. Interest rates, as well as the amount of monthly exposure, are usually fixed for the entire term. The only possible uncertainty factor relates to the fixed interest rate on the repayment-free loan: If this is fixed on a fixed date, changes in interest rates can occur because the date of granting the building loan is not guaranteed. However, most providers link the fixed interest rate to the allotment maturity.

The residential Riester subsidy can be used for real estate that was acquired after 2007 and used by the owner as the main residence. The payments into promoted contracts can be taxed within the legal limits. For a contract to be promoted, it must be certified by the Federal Financial Supervisory Authority or the Federal Central Tax Office.

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