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Mortgage saving plans were initiated more than 80 years ago. The Wüstenrot Bausparkasse AG is Germany’s oldest building society. It was set up in Wüstenrot, a village of the Swabian Forest, in 1921. The basic idea of mortgage savings may be represented as follows:

10 people would like to build their own house, but as none of them has the required capital, they decide to save a certain amount of money. If each one saves 10% of the required capital every year, he will have accumulated the required capital only after this 10-year period. However, if these ten people combine their money, the first one will be able to build his house after only one year, using the money saved by the other nine people. The second year, the second member of the group will build his house, using the money saved by the other eight members and the redemption part of the first, whose house is already built. The third year, it will be the third’s turn, and so on. In this way, each of them reaches his goal  – spread over a period of ten years – and on average 4½ years earlier than if he had saved the required capital alone.

Today, this system works somewhat differently. It has become an “open” system, which means that new members constantly join this “open circle” of the community of the members of the building society.