Advance withdrawal from occupational pension: reduce mortgage debt on residential property
You can use funds from your occupational pension and pillar 3a to purchase owner-occupied residential property. This reduces your mortgage debt. Comparis shows you how to optimise your loan-to-value ratio using pension assets.
22.09.2025
iStock / skynesher
1. Property financing using advance withdrawals from pension assets
Most property buyers in Switzerland rely on the support of a lender (debt capital) to finance their home.
However, to take out a mortgage, you must pay at least 20% of the purchase price of the property from your own pocket (equity). Of this, at least 10% must come from so-called «hard equity» such as account or savings balances. Early withdrawals from pillar 3a are also considered hard equity.
Home ownership subsidy (WEF)
The home ownership subsidy (WEF) helps to finance your deposit: you may use funds from your occupational pension (2nd pillar) to purchase real estate. You basically have two options:
an advance withdrawal to increase your deposit
a pledge of your pension assets to secure your mortgage
2. Advance withdrawal from occupational pension for home ownership in Switzerland: requirements
You must meet the following conditions for an advance withdrawal from the occupational pension for real estate financing:
An advance withdrawal is only possible as long as no pension benefit event has occurred. As soon as you receive an old-age or disability pension, advance withdrawal is no longer possible.
You may withdraw money from your occupational pension in the following circumstances:
To buy owner-occupied residential property that you will occupy yourself on a permanent basis.
To build owner-occupied residential property that you will occupy yourself on a permanent basis.
For value-enhancing investments in owner-occupied residential property.
To amortise the mortgage on your owner-occupied residential property.
For shares in a housing cooperative or similar investments.
Important: You may not use your occupational pension to finance a second home.
You cannot withdraw unlimited amounts of money from your occupational pension. The following conditions apply:
Minimum amount
The minimum pension withdrawal is CHF 20,000. You must have saved this amount or more in your pension fund.
Maximum amount
Up to the age of 50, you can withdraw your entire pension fund balance. From the age of 50, you have the following options:
Withdrawal of savings up to the age of 50
or half of the current balance
As a rule, you will receive the higher of the two amounts. For an advance withdrawal, contact your pension fund directly. They will provide you with the application form.
In principle, an advance withdrawal is possible every five years. The last possible time for an early pension fund withdrawal is usually three years before regular retirement.
If you sell your home, you must repay the pension fund money you received under the home ownership subsidy (WEF). In exceptional cases, there is no repayment obligation:
You use the money gained from the sale within two years for a reinvestment in an owner-occupied home.
You are unable to use your home involuntarily or temporarily (e.g. for health reasons or due to a job-related move).
Once you retire, you no longer have to repay the pension fund money you have withdrawn. This also applies if you become disabled or die.
Each repayment must amount to at least CHF 10,000. If the shortfall is smaller, you must pay the full amount in one lump sum. You can also make voluntary repayments.
3. Early pension fund withdrawal for home ownership: advantages and disadvantages
The table provides an overview of the advantages and disadvantages of an early pension fund withdrawal for home ownership.
| Advantages | Disadvantages |
|---|---|
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Benefits of advance withdrawals from your pension fund
Our mortgage partner HypoPlus helps you make the most of the benefits of an advance withdrawal from your pension fund to finance your home purchase.
4. Pillar 3a advance withdrawals for home ownership in Switzerland: these are the conditions
For an advance withdrawal from pillar 3a to finance a property purchase, the following conditions apply:
Unlike withdrawals from occupational pensions, withdrawals from pillar 3a to finance a property purchase are considered «real equity».
As with an advance withdrawal from your pension fund, you may only use the capital for owner-occupied residential property.
In addition to purchasing residential property, you can also use the advance withdrawal to repay a mortgage debt.
A partial withdrawal of pillar 3a capital is only possible up to five years before you reach statutory retirement age. After that, you can only withdraw the entire amount from the respective account. Therefore, it is worth holding multiple pillar 3a accounts.
Unlike early withdrawals from occupational pensions, there is no minimum amount.
5. Pledging the pension fund and pillar 3a for your own home
Unlike advance withdrawals, pledging the pension fund or pillar 3a does not result in an increase in equity . It only serves as collateral for increasing the mortgage.
The pledged money may only be used by the credit bank in the event of gross and definitive payment difficulties. This way, the money remains in the pension fund and continues to grow tax-free. This means it can increase further through interest and capital gains.
The table gives an overview of the advantages and disadvantages of pledging your pension fund or pillar 3a savings to buy a home:
| Advantages | Disadvantages |
|---|---|
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Whether you choose to make an advance withdrawal or pledge your pension fund or pillar 3a pension, both options have advantages and risks. Your individual situation is decisive. Our mortgage partner HypoPlus supports you in finding the right financing solution for your home.
6. Advance withdrawal of the state pension for home ownership: Is it possible?
In Switzerland, it is not possible to withdraw your state pension early to buy a home. The state pension is intended exclusively as a statutory old-age, survivors’ and disability pension. Unlike the pension fund or pillar 3a, you cannot use it to finance a property purchase.
7. Advance withdrawal from the pension fund for home ownership: Frequently asked questions
The final deadline for an advance withdrawal from the pension fund is usually three years before the normal retirement age. However, some pension funds have less stringent rules regarding this deadline.
A partial withdrawal of pillar 3a capital is only possible up to five years before the normal retirement age. After that, you can only withdraw the total amount of the respective account.
Yes, you can voluntarily repay a WEF advance withdrawal to the pension fund. In certain cases (e.g. if you sell your property), you are even obliged to repay the advance withdrawn funds.
The advantage of repayment: it improves your pension benefits in old age.
You can repay the advance withdrawal from the 2nd pillar until you retire, until another pension event (disability or death) or until the termination benefit is paid out in cash.
Important: If you sell your home more than three years before reaching the normal retirement age, you must repay the advance withdrawal.
Apply for repayment directly with your pension fund. Typically, there is an official form or letter that you need to complete.
In the event of a divorce, the WEF advance withdrawal from the pension fund is treated as vested benefit and taken into account when dividing the pension assets.
The court divides it into a premarital and a marital part. As a rule, the interest loss as a result of the advance withdrawal, proportionally distributed between the two spouses.
In the case of an advance withdrawal from the pension fund for home ownership, a capital withdrawal tax is payable. This is significantly lower than income tax. The actual amount varies depending on the place of residence and the amount withdrawn. Calculate your individual tax on a lump-sum withdrawal.
This article was first published on 06.03.2018
