Instead of saving in savings account, why wouldn’t you open an ASP account?
Have you ever dreamed of buying an own home? Are there some decorative ideas in your mind or a certain area where your dream home should be located? Have you dreamed of how many rooms there would be or what kind of a kitchen solution would be the best?
ASP account may be a faster and easier way to get loan for buying a home. It’s suitable for adults between 18-30 years of age who are considering of buying their first very own home.
With an ASP account you get nice benefits for savings. Compared to the normal savings account ASP account has a bonus system. The interest is tax free and the depositor gets an extra interest of the first five years. The extra interest is better than normal interest in these days and mainly that attracts adults to open an ASP account.
What is an ASP account?
ASP account, a.k.a Home Savings Bonus Account, is an efficient and profitable way to save for a home of your own. With ASP Account you get 1 per cent annual interest tax free for deposits made and during the first five years the bank pays max 4 per cent extra interest. (Nordea 2014). In a regular savings account the interests aren’t as good.
In practise an ASP account opener deposits 150 – 2000 euros every 3 months in the ASP account. When 10 per cent of the price of home is deposited and at least 2 years have gone after the opening, bank grants loan. If the amount of granted loan is not enough, it is possible to take another loan to deal with the rest of the price. (Simola 2013.)
An ASP account makes receiving a loan easy. The depositor doesn’t need a guarantor, because the state guarantees the loan for ASP account depositors. Without having an ASP account is much harder to get loan with a state guarantee.
Before taking out a loan it is important to request quotations from different banks. Any Finnish bank can grant ASP loan. It means that it is not necessary to take out loan from the bank where the deposits have been done. (Simola 2013.)
Interesting interest margins
In the beginning of 1990’s ASP accounts were very popular in Finland. The number of ASP loans reached a peak in the early 1990’s, but in the end of that decade its popularity had fallen down. ASP loans’ direction changed in 2009–2011 because Finnish banks offered bonuses for ASP depositors. Even though the bonus system was temporary the ASP saving became more popular again. (Simola 2013.) The figure below shows by monthly the amount of opened ASP accounts in 2009-2013.
The figure above shows that in 2013 the number of opened accounts was higher than in previous year 2012. The figure shows that there has been an upward trend since 2010.
Ulla Halonen, financial expert in the Federation of Finnish Financial Services, says that low interest margins for savings encourages to save in ASP account. Halonen says that in addition to one per cent interest the 2–4 per cents bonus interest stimulates savers to open ASP accounts. (Karhunen 2014.)
One significant benefit for ASP loans is that usually its interests are lower than typical housing loans’ interest margin. The size of the principal depends of the customership between the bank and the customer. (Simola 2013.) Also if the loan interests rise, ASP borrowers doesn’t need to worry about it.
In case that loan interests rise, ASP borrowers can have interest subsidy from state. It means that the state pays part of the loan interest. (Nordea 2014.) At the moment interest margin is low, but likely several ASP borrowers are going to benefit of the interest subsidy in future. (Simola 2013.)
The winds of change
ASP accounts’ opening has age limits. Today, the minimum age is 18 and maximum age is 30. Finanssialan Keskusliitto suggests that minimum and maximum age limits should be loosen. Piia-Noora Kauppi, CEO in the Federation of Finnish Financial Services, says that even the removal of age limits is an option in future. (MTV3 2014.)
The age limit removal could for example give an option for those young adults who live years abroad and still when coming back to Finland, dream of buying their own home. It would also give more time for saving and that would support adults who do a lot of temporary work.
If you are interested in opening an ASP account, please contact your own bank for further info.
Check for more info:
Karhunen, Jussi 2014. ASP-ensiasuntoja ostetaan kiihtyvällä tahdilla, vaikka muu kauppa seisoo. http://www.fkl.fi/ajankohtaista/tiedotteet/Sivut/ASP_asunto_ostojen_kiihtyva_tahti.aspx. Read 15.3.2014.
MTV3 2014. Finanssiala: Lainakatto edellyttää ASP-säästämisen kehittämistä. http://www.mtv.fi/uutiset/talous/artikkeli/finanssiala–lainakatto-edellyttaa-asp-saastamisen-kehittamista/2787976. Published 4.2.2014. Read 15.3.2014.
Nordea 2014. ASP account. http://www.nordea.fi/Personal+customers/Savings/Savings+accounts/ASP+account/52387.html?lnkID=product-box_en_home-savings-bonus-account_10-04-2013. Read 15.3.2014.
Simola, Ulla 2013. ASP alkaa taas kiinnostaa nuoria. Taloustaito 8.8.2013. http://www.taloustaito.fi/fi-FI/a/asunto/asp-alkaa-taas-kiinnostaa-nuoria-2. Read 15.3.2014.