Construction Savings Bank
The construction savings bank (or building society) is a specialized bank. The source of resources for targeted housing loans in the construction savings bank are contributions from citizens, borrowers' fees for using a housing loan, as well as a state premium, which is paid in accordance with a construction savings contract, provided that the depositor has invested a certain amount in his account during the year. A housing loan can only be received by a depositor of the construction savings bank after a certain time (usually several years), during which he monthly made deposits for the amount specified in the contract. Interest rates (both on deposits and loans) are fixed for the entire duration of the contract.
The repayment of the housing loan is carried out within the period specified in the contract on building savings. The maximum loan repayment term is usually 12 years. Interest rates are usually 5-6% per annum (an average of 4 percent below market rates).
In Germany, building savings banks (German: bausparkasse) began to emerge at the end of the 18th century in mining villages. Their activities were organized according to the following principle: if the construction of one house required 10 thousand monetary units, and everyone who wanted to acquire their own housing could save only a thousand in a year, then, therefore, he could build housing only after 10 years. In the case of pooling the savings of ten such applicants, one of them could acquire a home in a year, the second in two, and so on. Everyone but the last one wins. This is compensated by the fact that the first builder contributes a little more than a thousand to repay the debt, each subsequent one a little less. Thus, the one who builds later gets housing somewhat cheaper.
Modern construction savings companies specialize in providing loans for the construction, purchase, reconstruction of a house or apartment. At the end of 2009, there were 14 private and 10 state construction savings banks in Germany.
History of building savings banks in Germany
Although the system of saving funds for housing construction originated as early as 200 BC. e. in China, the first construction savings bank