Riester housing subsidy offers the opportunity to combine regular savings with loan repayment
Construction financing involves a large financial outlay for most borrowers. Therefore, every additional euro is welcome, which can flow into the repayment of the real estate loan, for example. One option is the so-called Wohnriester, which is a special form of the well-known Riester pension.
Riester pension as a state incentive
The Riester pension has now existed in Germany for more than 20 years. The state subsidy was created to give significantly more citizens an incentive to make private provision for their future pension. All you need to do is conclude a Riester contract into which you make monthly payments. As a reward, you will receive a basic allowance in any case. If there are also underage children in the house, there is an additional child allowance. A family of four, for example, would ideally receive 950 euros year after year in this way.
There are some eligible forms of savings where the Riester allowances can flow into the contract. These are, in particular, the following variants:
- Bank savings plan
- Building savings contract
- Private pension insurance (classic and unit-linked)
- Fund savings plan
- ETF savings plan
However, endowment life insurance policies and equity savings plans are not eligible for Riester subsidies, nor are precious metal blocking plans. A special form of the Riester subsidy or. the possibility to use the allowances is the so called Wohnriester.
- Nationwide network
- Qualified providers
- Non-binding
- Free of charge
What is the Wohnriester?
Wohnriester is basically just a special name for how the Riester subsidy can be used. However, there are several variants, such as a Riester home savings contract or a special Riester loan. All Wohnriester variants have in common, however, that you can save or / and let the allowances flow into the repayment of a loan. However, you can only use Wohnriester if you are eligible for subsidies and own your own property.
What options does Wohnriester offer?
With the Wohnriester, you have several options for how to use the corresponding funds. A distinction is made between the following variants in particular:
- Riester home savings contract
- Riester loan
- Dissolve the Riester contract and use it to repay a real estate loan
A Riester home savings contract is particularly suitable if you do not yet own your own property, but would like to accumulate capital first. In this case, you first enter the savings phase and can of course have the Riester allowances flow into the Riester home savings contract. Once the contract is ready for allocation, you receive a low-interest home savings loan and can use the savings to repay the real estate loan.
With a Riester loan, this "detour" does not exist. In that case, you take out the Riester loan and simply let the annual allowances (basic and possibly child allowance) flow into the real estate loan in the form of an additional repayment. In this case, no money has to be saved beforehand, but instead only the allowances flow into the Riester loan as repayment.
A lesser-known option for using the "Wohnriester" is the dissolution of a "normal" Riester contract that has already been saved. This can be, for example, a Riester fund savings plan. When the contract is terminated, the credit balance is released and you can use it to repay a real estate loan without incurring premiums. In contrast to a normal dissolution, you do not have to pay back the allowances you have already received.
Note: There are several ways in which you can use Wohnriester. The option of taking out a Riester loan and incorporating the annual allowances into the Riester loan as repayments is particularly popular.
For whom is Wohnriester useful?
Of course, Wohnriester does not make sense for all real estate buyers or builders, but various conditions must be met. First of all, you should be eligible, otherwise you can not use the corresponding Riester contract anyway. In addition, it is worth considering Wohnriester if the following points apply:
- You would like to buy or build an owner-occupied property
- Besides a saved Riester contract, you otherwise have little or no equity capital
- You have planned to live in the property for a very long time
- You are planning to use the Riester allowances to repay your real estate loan
Under these conditions, in most cases it makes a lot of sense not to opt for an ordinary Riester contract or. Using another Riester contract to use capital to repay a real estate loan in the form of a housing riester.