Bausparen — building society savings and loan contract

Government subsidies: exact amounts for 2026

Wohnungsbauprämie — housing premium

An important detail that is often found out too late: The bonus is not paid annually. It accumulates and is paid out together with the accumulated savings upon allocation of the contract (Zuteilung).

Two limitations that specifically apply to our audience

1. Contracts concluded from 1 January 2009 provide a bonus only for residential use. Simply withdrawing the money after seven years and spending it on whatever you like — as was the case with older contracts — is no longer possible: the bonus is forfeited.

Exceptions in which the bonus is retained: the contract has been concluded under the age of 25 and at least seven years have passed (valid once in a lifetime); death or complete disability of the depositor or spouse; unemployment for at least a consecutive year, continuing at the time of the disposal of the money.

2. The accommodation must be located in an EU or EEA country. A flat in Germany, Spain, Poland or Bulgaria — the bonus is retained. A flat in Russia, Kazakhstan, Serbia or Turkey — the bonus is completely forfeited. This is explicitly written in the law, and Russian-language websites hardly write about it.

Arbeitnehmer-Sparzulage — VL top-up

A little-known and very practical distinction. The Capital Accumulation Act directly extends the seven-year period to Bausparverträge — regardless of whether the contract was concluded before or after 2009. This means: Unlike the Wohnungsbauprämie, the Arbeitnehmer-Sparzulage does not require the funds to be used for residential purposes. You just have to wait seven years, and the money along with the top-up payment can be spent however and wherever you like. For those who are not sure they will buy property specifically in Germany, the difference is fundamental.

An important condition: to receive the top-up payment, you must consent to the electronic transfer of data to the provider. A paper VL certificate is no longer accepted — without consent, there is no entitlement to the top-up payment.

Wohn-Riester and the 31 December 2026 deadline

The reform has been adopted. The Private Pension Reform Act passed the Bundesrat on 8 May 2026. New products will be available from 1 January 2027, and 31 December 2026 is the final day to conclude a Riester and Wohn-Riester contract in its current form. Existing contracts remain in place; from 2027, the owner will decide for themselves whether to stay in the old regime or switch to the new one.

The Eigenheimrente (home ownership pension, i.e. Wohn-Riester) is not being abolished but integrated into the new system: the basic allowance will rise to a maximum of €540 per year, and the child allowance will be up to €300 regardless of the year of birth.

Bear in mind the deferred taxation: the amount withdrawn for housing is recorded in a notional account (Wohnförderkonto), which grows by 2 % a year until retirement and is then taxed — either as a lump sum with a 30 per cent reduction, or in instalments. Also: the Wohnungsbauprämie and the Riester scheme cannot be combined for the same contributions.

Fair calculation: when Bausparen is worthwhile and when it is not

Bausparen is essentially insurance against rising interest rates. Like any insurance, it comes with a cost, and it is worth knowing that before signing.

What is the price made up of

Break-even point

Model calculation using the calculator of one of the major building societies: the target is €100,000 in eight years, with a monthly contribution of €501. Two paths are compared — saving in a deposit account and then taking out a standard bank loan, or saving in a Bausparvertrag and taking out a Bauspardarlehen (building society loan).

Both options produce the same total costs in this calculation. Therefore, the break-even point is 4.35 %: Bausparen only wins if, after eight years, a standard mortgage costs more.

Where is the market at the moment?

Two honest conclusions.

Firstly: rates for the first half of 2026 have risen — from 3.58 to 3.76 % for terms of 5–10 years. This is an argument in favour of fixing the rate in advance. However, there is still a gap of around 0.6 percentage points to the 4.35 % threshold, and the yield curve is normal but flat: fixing for more than 10 years costs only 0.22 points more than for 5–10 years. In other words, the market is not pricing in a sharp rise in rates.

Second: if you are a family with children and fit within the income limits of the KfW 300 or 308 schemes, these programmes are cheaper than any Bauspardarlehen — rates there start from 0.01 %. Income limits range from €90,000 a year for one child to €130,000 for five. It’s worth checking these before signing anything else.

Where Bausparen truly comes into its own: when you know for sure that in 6 to 12 years you will be renovating your home or buying property, and you want to lock in the interest rate today. In May 2026, Stiftung Warentest tested more than 220 tariff options from all 13 German building societies and confirmed: for future renovations, a Bausparvertrag can make sense — precisely because of the favourable future loan interest rate. As a way simply to save money, it loses out to a standard savings account.

Unlawful fees: how to get your money back

Over the last ten years, the German Federal Court of Justice has consistently declared almost all regular Bausparkasse fees invalid. If such fees were deducted from your account, you can claim them back.

The last ruling in the table is the most recent and the most important. Until July 2026, Wohn-Riester contracts remained a grey area: the providers claimed that the Pension Products Certification Act justified such fees. The Federal Court of Justice explicitly rejected this argument. If you have a Riester home-savings contract (Bausparvertrag) and annual fees were deducted from it, the money is subject to a refund.

How to request a refund

1. Pull the statements and calculate which regular fees were debited and for which years.
2. Limitation period — three years, counted from the end of the calendar year. That is, in 2026 you can reclaim fees for the years 2023, 2024 and 2025.
3. Send a written demand to the Bausparkasse. The Verbraucherzentrale has a ready-made template letter.
4. Important: a simple demand for payment does not suspend the limitation period. If the deadline is approaching, more serious steps are required – an application to the conciliation body or a court order.
5. Out-of-court disputes are handled by a conciliation body: the Schlichtungsstelle Bausparen for private building societies, and the respective body of the association of public banks for LBS.

Not yet decided: a similar case regarding “Vertragsentgelt” involving another major Bausparkasse is pending before the Federal Court of Justice — the lower court deemed the fee permissible in December 2025, which directly contradicts the ruling from July 2026. A decision may be issued in the coming months.

Common mistakes and important limitations

The contract sum is too high

The origination fee is calculated from all of the contract amount, rather than what you actually accumulate. A €60,000 contract with a commission of 1.6 % costs €960 upfront. If the aim is simply to receive bonuses and top-ups to your VL, an amount of €10,000–20,000 is sufficient. You can reduce the amount later, but the commission for the withdrawn portion will not be refunded.

The Bausparkasse can terminate the contract

The Supreme Court confirmed in February 2017: ten years after the contract became eligible for allocation (Zuteilungsreife), the building society is entitled to terminate the contract with six months’ notice. This legalised around 250’000 terminations of old, lucrative contracts.

What owners of old contracts with a high rate need to know:

• bonus interest for declining the loan does not protect against termination — this was confirmed by a separate ruling in 2018;
• If the contract amount has been fully accumulated, the purpose of the contract is considered achieved and the building society may terminate it even without the ten-year period. Therefore, overpaying above the standard contribution is harmful;
• the Bausparkasse, as a rule, is not obliged to accept contributions above the usual amount.

That said, the old contract, with a yield of around 3 %, is currently one of the best savings products on the market, and it is worth keeping. If you have received a notice of termination, check the following: whether any bonuses have been counted towards the contract amount; whether the limitation period for the bank’s claims has expired; and whether the bank had previously allowed you to pause your payments.

Moving abroad

The contract itself can be managed even while living outside Germany. However, the housing premium is only retained when you buy a home in the EU or EEA, and moving outside the EEA terminates the unlimited tax liability and makes the use of Wohn-Riester “harmful” — top-up payments and tax reliefs will have to be returned.

Inheritance

The contract passes to the heirs. The Bausparkasse cannot force them to take an early payout: accumulated premiums and bonus interest are retained, and the heirs decide for themselves when to accept the allocation.

Deposit protection

Savings are protected like regular bank deposits — up to €100,000 per person. For some building societies, protection is organised through industry schemes, while for the savings banks (Sparkassen) it works through a joint liability scheme without a formal limit.

What can a loan be spent on

The law provides an exhaustive list: the construction, purchase, maintenance and improvement of housing; the purchase of a plot of land or building rights for housing; the development of residential areas; repayment of other loans taken out for the same purposes (that is, the refinancing of a housing loan); the discharge of encumbrances on a plot of land. Separately counted are the tenant’s works on modernising their own rented flat and the initial purchase of shares in a housing cooperative.