Capital investment building society contracts: House purchase, construction and conversion

What is a building society contract? How does a bauspar contract work? When does it make sense to save under a building society contract? Hundreds of thousands of savers dream of owning their own home, their first property, for the return on their investment or for their own retirement provision. Building savings has many triggers, but the goal is clear: your own property. In the search for the right home loan calculator and of course the subsequent home loan comparison, many spend hour after hour looking for the right tips on building savings. We have once looked at the most important facts on the subject for you.

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Building savings for your own property

With building savings, you benefit from various subsidies such as premiums from the state. You can use your building savings contract for the purpose of building, buying or renovating a house. However, a building savings contract is also interesting for property owners, for example to finance modernisation measures. The respective costs depend heavily on the provider.

Lukinski Villas

Germany - Spain - USA

Building savings is one of the top 5 most popular forms of capital investment among Germans.

Statistik: Welche Möglichkeiten der Geldanlage nutzen Sie aktuell? | Statista

Source: Statista

Procedure and phases

The strengths of a building savings contract lie in its fixed predictability. A bauspar contract consists of two phases, the savings phase and the accumulation phase. With a bauspar contract, you first save about half of the planned bauspar sum (see bauspar calculator), the other half is then given as a loan at a fixed interest rate.

There are many questions as already described, from what is the savings phase to how long is the term of a building savings contract to what is understood by a building savings contract? But also the advantages and disadvantages are important for many who want to start saving. What are the advantages of a building savings contract?

No equity capital necessary

The highlight of any building society contract is that it can be used without any equity capital at all, it can be set up anywhere, on site in branches but also online in comparison portals.

The disadvantage is that the payout is bound to strict regulations, and the risk of default is extremely low, especially in the case of old contracts. Did you already know? It is possible to convert building savings contracts into capital investments by paying premiums – however, this advantage is usually limited to the old contracts just mentioned. Unfortunately, such contracts are hardly ever offered in the current interest rate situation. The current yield of bauspar contracts is mediocre.

Facts about building savings

The most important 3 facts about the building society contract:

  1. No equity capital necessary
  2. Support through premiums from the state
  3. Earmarked (according to strict regulations) for house construction, purchase and conversion

Building savings really pays off for everyone. It’s easy to take out, and the plan has a clear goal. Whether you want to live rent-free or save for retirement, building savings is a real must for building up equity.


  • No equity capital necessary
  • Individual building savings plan that suits your needs (more under Building Savings Calculator below)
  • Support through premiums from the state
  • Fixed interest on credit balances
  • Extremely low risk of default


  • Earmarked (according to strict regulations) for house construction, purchase and conversion

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Building savings calculator

The calculation is intended to provide you with an initial orientation as to what purchase price you will be able to afford in the end. The indicated purchase price is an approximate, non-binding value. The following parameters are required for the calculation:

  • Current cold rent (e.g. 900 Euro)
  • Desired savings (e.g. 400 Euro)
  • Move-in date (e.g. 8 years)
  • Equity capital (e.g. 50,000 euros)

From these variables you would have the following result

  • My possible purchase price
    292,000 Euro
  • + incidental expenses (approx. 12 %)
    36,000 Euro
  • My total costs
    328,000 Euro

You want to calculate yourself? Here you will find a good calculator for your building society contract:

Build or buy? New building costs

Build it yourself or buy it, that’s the big question! There are individual advantages and disadvantages to both. We take a look at the most important facts you need to consider when building new or buying real estate.

New construction has many advantages, including, for example, the various options you have as a builder. This concerns the design of the house but also the design of the property. You will be the first to move into the property, so everything is new and of high quality, including the technology in the house. Of course, there are also disadvantages, for example, craftsmen are rare and building a house is expensive. You will have a lot of work ahead of you, applications and also visits to the building site.

Region Cost of land ready for building (per m²)
Germany (average) 194,87 €
Saxony-Anhalt 33,23 €
Hamburg 654,52 €
Bavaria 255,42 €

Average prices for building land 2017, source: Federal Statistical Office

Cost item Amount
Land costs (850m²) at 104 € per m² 88.400 €
House construction costs (150 m², without cellar, balcony, terrace) at 1.300 € per m² 195.000 €
Incidental building costs at 15 % of the purchase price 42.510 €
Total costs 325.910 €

Table: Construction costs, source: Federal Statistical Office

Loan term for house construction > 5 years

Almost all loans for real estate have a maturity of 5 years or more. Here is the stock volume of loans to households for house purchase with banks in the euro area in November 2010, in billions of euros.

Statistik: Bestandsvolumina von Wohnungsbaukrediten privater Haushalte bei Banken im Euro-Währungsgebiet im November 2010 in Milliarden Euro | Statista

Source: Statista

Expert tips for new construction

  1. Check every building contract for errors, preferably by a competent person, such as a civil engineer, an expert or even an architect.
  2. Ask to see the developer’s guarantees, which the company has deposited with banks. Should the developer go bankrupt during the construction phase, your construction would be secured.
  3. Pay only according to the progress of construction, with each further, central step you transfer another partial amount to the developer
  4. Cheap is never good in construction, you should pay attention to that, even when you are getting quotes. In the end, there are always pitfalls that you don’t notice as a private person.
  5. Become a member of a landowners’ association, because here you can get legal and economic answers to your questions, even free of charge.

Helpful Links: Buy & Sell Real Estate

Finally, here are some helpful links for your real estate search: