How to finance affordable building loan

Finance

With Good Credit in your own four walls. Almost 12 million Germans now have a Good Credit contract. Originally intended as an additional pension for retirement benefits, the model has also been used by another interest group since 2008. Good Credit is the latest state subsidy for the financing of a residential property.

With Good Credit for an affordable building loan

In particular, after the lucrative homeowner allowance ceases to exist, the state offers an additional support measure for all those who purchase residential property. It does not matter whether an object is actually built or bought.

In this way, it is even possible to buy shares in a housing association or to have permanent housing in a retirement home. True to the motto “your own four walls are the best pension scheme”, the contributions can be used for a Good Credit building society contract, as a payment for the loan installment or as debt relief.

However, the prerequisite is that the Good Credit savers use the property themselves, even when they retire because when moving abroad, all allowances and tax benefits for the construction Good Credit must be repaid.

Construction Good Credit with allowances and government funding

Good Credit and how much are the allowances? How much is your own contribution?

The basic allowance since 2008 for every saver: 154 dollars per year, for married people: 308 dollars. Young professionals under the age of 25 receive a one-time bonus of 200 dollars when the contract is signed. In addition, an allowance of 185 dollars per year is paid for each child, provided that they receive child benefit. For children born in 2008 or later, the child allowance is even 300 dollars.

To make full use of these savings bonuses, savers have to contribute four percent of their gross income to their Good Credit pension, with government allowances being deducted. With a gross income of 30,000 dollars, this means 1,200 dollars; the own contribution, minus the basic allowance of 154 dollars, would, therefore, be 1,046 dollars. The own contribution is tax-deductible up to an amount of 2,100 dollars per year.

Otherwise, the motto applies, those who save less receive less Good Credit allowances. In order to be able to take advantage of the various advantages, at least 60 dollars per year must be paid in. For financing with the help of Good Credit, it is advisable to pay in the maximum amount so that the full amount of state funding can be drawn off.

Good Credit helps save money

Instead of paying into a pension account, the allowances and own contributions (for the amount of the allowances see below) are paid directly into a Good Credit building society savings contract. In addition to the government grants, the building society savers also benefit from the interest and possibly from tax relief, since the personal contribution is tax-deductible as a special expense.

Construction Good Credit with smaller loan installments for the construction loan

But even those who take out a construction loan can take advantage of the subsidy to pay off the monthly loan installment with a construction Good Credit. Since the entire government allowance can be used, Good Credit reduces the building loan from the start and thus promotes a quicker repayment of the loan.

In addition, the capital saved is included as equity in the financing of a property, so that the monthly burden for the client is reduced. But be careful: Only certified mortgage lenders are allowed to offer such a Good Credit loan contract.

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