If you do not have your own apartment yet, housing savings is still one of the possible solutions. Housing savings is a very simple product. First you pay your money (save) for a while, and after that that money is returned to you and you have the option, but not the obligation, to take out a favorable housing loan. Usually the ratio of money saved and credit is 40:60 or 50:50. The loan can be used for the following purposes
buying an apartment or family house,
construction of an apartment or family house,
reconstruction, adaptation and repair and furnishing of an apartment or family house
(Reconstruction, adaptation and repair includes installation of central heating, construction of roof, bathroom, new electrical or plumbing installation, installation of windows, doors, air conditioning, etc. Furnishing an apartment or family house is the purchase of furniture, appliances, video and audio appliances, IT equipment, lighting, carpets and other equipment for the apartment and the house that improves the quality of housing.)
purchase of a building plot without or with a partially constructed building,
communal arrangement of the building plot (all connections),
repayment of housing loans of commercial banks.
In order to encourage the resolution of the housing issue, the state allocates incentive funds in the maximum amount of USD 750 per year, ie gives you another 15% of what you pay during the year. If you pay $1,000 in one year, the state will add another $150 (15% of 1,000), if you pay $5,000 you will get $750, but if you pay $6,000 you will still get only $750. Since the state incentives are related to the person or your ID, if you want to save more than $5,000 per year, it is recommended to open another savings, but in the name of one of the immediate family members (spouses, first relatives, siblings who live together) . It’s called family savings and that way you can take more money from the state, and eventually the contracts merge and you take one bigger loan.
A very good thing about a housing savings bank is that if you can save a certain amount per month, you will be able to pay the same amount later to repay the loan.
Contracted amount (target amount) – this is the amount of money you need, which you want to dispose of. If you are planning to buy an apartment that costs 70 thousand USD, then the contracted amount should be 70 thousand USD. The contract amount consists of your savings + government incentives + interest and the LOAN you take. Most often your share (savings, interest and incentives) is 40-50% of the contracted amount, and the other 50-60% is the loan. You determine this in advance when concluding a savings contract.
Savings period – refers to a period of usually 2 to 5 years when you pay a certain amount and save money. You usually need to collect.
Lending period – the time while we repay the loan.
Family savings – contracting more housing savings contracts for different family members in order to obtain the maximum state incentive funds
Annuity – the amount of money you pay monthly to repay the loan. It’s usually there somewhere or less than the amount you paid while saving.
Advantages of housing savings
A great advantage of housing savings is that it offers a FIXED interest rate for the entire loan repayment period. That fact alone is enough to make you think seriously about that product. In the last few years, interest rates have been quite low and I doubt they can go much lower, but in the event of market disruptions they can easily rise. This way you are sure that your amount will not increase significantly. Also, some savings banks offer loans in other currencies.
It is cheaper than taking a big loan right away. Let’s say you want to take out a $70,000 loan. If you immediately take a loan with an interest rate of 5.5% for 20 years, you will pay a total of about 44,000 USD of interest. However, if you save for 5 years and collect USD 28,000 and then take a loan of USD 42,000, then you will have a total of USD 70,000 at your disposal again, you will pay only USD 19,000 in interest on that loan with the same interest and repayment period. of 15 years. So you will pay 25,000 USD less interest (44,000 – 19,000) if you are patient for 5 years and take a smaller amount of credit, and save the difference. In both cases, you solved the housing issue within 20 years, only in the second case you went through it much cheaper.
After 5 years of saving you can take your savings, interest and government incentives and spend that money on whatever you want. You don’t have to spend it on purpose – it’s your money. Only the loan must be used for the stated purposes.
After the state incentives have been reduced from USD 1,250 to USD 750 per year, they are no longer as attractive and with them the interest on savings turns out to be around 6%, as you can get in a bank.
Differences between savings banks
Since all savings banks must operate according to the same law, the differences are minimal. However, all of them try to complicate the possible comparison as much as possible and constantly have promotions, discounts, etc. in order to differentiate themselves from the others. It is difficult for me to give concrete advice which is better, but I would definitely ask for the one with the lowest interest rate for the loan.