ACSS Advises: Home-Building Savings Contracts Not Expiring
ACSS advises: Home-building savings contracts remain in full force and effect regardless of the expiration of the minimal saving phase period.
Lately, there have been reports in the press in relation to the approaching end of the five-year period since an amendment to the law on building saving came into force. „I must respond to those reports because in many cases, they may confuse clients of building savings banks and cause them to take steps that would not be beneficial for them,“ said Vojtech Lukas, Chairman of the Association of Czech Building Savings Banks.
First of all, we should stress that statements in the press such as „home-building savings contracts to expire for many clients“ are completely false. The 2008 is merely a year when contracts signed in 2003 reach five years. However, the passing of five years does not mean that the contracts expire. Those contracts remain effective. This only marks the end of the period decisive for crediting advance payments of state support to the account. What does it mean in practice? If a client did not withdraw any money from his or her account for five years,the state support will be permanently credited to the account, i.e. the advance payments will turn into an irrevocable yield.
A building saving contract remains in full
force and effect
although the minimal saving period expires.
Clients can continue depositing money to their accounts until they reach the target amount. Or they can ask for a loan, either a so-called bridge loan or a proper home building loan, if they meet all the requirements. Or they can terminate their contracts and withdraw all the money from their home building savings account.
„I recommend that clients consult their building savings bank or financial advisor on the next steps,“ Vojtech Lukas advises clients how to avoid a bad decision based on the false impression that the contract expires after five years. A wrong but voluntary decision would be irreversible under the law and could cause a loss of thousands of crowns for the client. „If anyone tries to persuade a client that his or her existing contract needs to be terminated and a new one should be signed, we advise the client to consider carefully whether the recommendation comes from a trustworthy source,“ concludes the chairman of the Association of Czech Building Savings Banks.