How does a home savings contract work in the context of mortgage financing?

A home savings contract is a specialized savings agreement made with a building society. In the first phase of the contract, known as the savings phase, the saver regularly deposits money into the contract until a pre-agreed amount, referred to as the target savings sum, is reached. Once this amount is achieved, the contract moves into the second phase, called the loan phase. During this phase, the saver receives a low-interest loan from the building society to finance a property. The combination of saving and borrowing makes the home savings contract an attractive tool for mortgage financing. It enables the saver to establish a predictable financial foundation for purchasing or renovating a property.