Basic information on mortgages

Early withdrawal of retirement savings for residential property

Many people dream of owning their own property, and in Switzerland, home ownership is promoted by the state. In specific terms, this means that retirement savings can be used in order to purchase owner-occupied residential property. Lenders require a deposit of 20 per cent, which can be an awful lot of money. Read this article to discover how you can optimize your loan-to-value ratio with your retirement savings and ensure that home ownership does not have to remain a dream.

a) Early withdrawals of pension fund and pillar 3a assets

Early withdrawals of the retirement savings accrued in a pension fund or pillar 3a account can free up additional equity for the purchase or construction of a permanently owner-occupied residential property. This does not apply to the financing of investment properties, holiday apartments or buy-to-let properties.

Early withdrawals are possible every five years. The payout of the pension capital is taxed at a reduced rate, which varies according to place of residence and the amount of money in question.

Pros Cons
  • Mortgage debt is decreased and equity increased
  • Lower mortgage interest thanks to improved loan-to-value ratio
  • Retirement pension is reduced
  • The amount withdrawn is taxed immediately


The following applies to early withdrawals from pillar 2:

  • For mortgages, a maximum of 10 per cent, i.e. half of the required 20 per cent deposit, can come from pension fund assets.
  • The minimum amount that can be withdrawn from the retirement savings is 20,000 francs.
  • People under the age of 50 can withdraw their entire balance; after that, they can withdraw either the money they saved until the age of 50 or half of their current balance.
  • Early withdrawals can be used both to purchase residential property and to pay off a mortgage.
  • Beware: Caution should be exercised when making early withdrawals from pension funds. In the event of divorce, insolvency or a loss on the sale of the property, it is possible to lose both your property and your pension entitlement. The early withdrawal must be repaid as soon as the property is sold or is no longer owner-occupied.

The following applies to early withdrawals from pillar 3a:

  • There is no minimum amount for early withdrawals from pillar 3a.
  • Early withdrawals can be used both to purchase residential property and to pay off a mortgage.
  • Partial withdrawals of pillar 3a capital are only possible up to five years before regular retirement age. After that, it is only possible to withdraw the entire balance of the pension relationship in question. This is one of the reasons why it is worthwhile having multiple pillar 3a accounts.

b) Pledges of pension fund and pillar 3a assets

Pledges of pension fund or pillar 3a assets do not increase the amount of equity available; they simply serve as collateral for raising the amount of the mortgage. Since the pledge gives the financial institutions more security, it becomes possible to borrow more than 80 per cent of the purchase price. The pledged money can only be used if the borrower gets into serious, permanent difficulties with their payments. As a result, the money stays in the pension fund and continues to accumulate interest tax-free.

Pros Cons
  • Pension capital remains in the appropriate account and there is no reduction in the retirement pension.
  • The pension capital can continue to accumulate interest tax-free.
  • Increased mortgage interest payments are tax-deductible.
  • The deposit does not increase, meaning that the overall mortgage debt is higher.
  • Higher mortgage interest due to higher loan-to-value ratio.
  • In the event of failure to pay the mortgage interest, the lending bank is likely to seize the retirement savings.


Please also read

Tax-saving tips for mortgages
Tips on the subject of mortgages