Building and loan associations in Germany have existed since the 19th century. With its entry into force in 1973, the building society law is much younger.
The latter is nevertheless of considerable importance, since it does not only regulate the securing of loans from building societies. With the Building Society Act, the legislature specifies in detail what tasks the building society may perform in detail.
Section 4 of the (Lite Lender) regulates, among other things, the question of which businesses may still be operated in parallel to the building society business. Pre-financing or interim financing as construction financing are therefore permitted. However, other consumer finance transactions do not belong in the area of permitted transactions.
- The Lite Lender also clearly regulates what options a building society has with regard to the use of funds. In addition to certain investments that are permitted, each building society must, for example, avoid exchange rate risks.
Full funding is not provided for in the building society law
From the perspective of building owners, aspects that relate directly to building finance are much more interesting than the questions about investing customer funds. On the one hand, these are of course:
- Minimum savings balance
- Rating number and
- Minimum saving time.
The way in which a home loan is secured also plays a role here. In this context, building societies cannot make their own decisions – at this point they are bound by the building society law.
Maximum loan value according to the building society law
The latter stipulates in Section 7 (1) Lite Lender that a pledge can be used as security up to a maximum of 80 percent of the mortgage value – in other words, lend it with a lien. The consequence: Without additional collateral, full financing of the property is not possible through the home loan.
According to the , there is no general requirement to secure real estate liens. Up to a certain (not named) amount, the building society can waive the lien. This also applies in the event that replacement collateral is available in the appropriate amount.