Maybe you have more clues than I have: we are looking (me and my wife) to buy a property within the next months, and we would like to withdraw our 2nd pillars to make the downpayment for the mortgage. However, my question is: my wife only has around 14-15k CHF in her 2nd pillar, which is below the minimum 20k CHF balance for an early withdrawal. Is it possible to make a voluntary contribution from our bank into the second pilar to be able to reach 20k CHF and “unlock” it for an early withdrawal one or two months later? Or is it not allowed to withdraw so early after making a voluntary contribution?
My understanding is that it is possible to withdraw, but you just pay the tax penalty.
As an aside, if you’re scrabbling around for 20k to buy real estate, then you should probably not be buying real estate at all as it requires quite a lot of capital backing to deal with unexpected costs and maintenance (as well as the expected ones!).
Thank you for the answer! We have a timing issue because of pregnancy/new apartment needed and will have to buy within the next months. It’s possible we may not need the 2nd pillar at all, but just in case. We’ve only been here for 1-2 years but are both high earners, savings will be built back quickly
Thank you for the answer! Do you mean that it’s not possible to pledge a normal 2nd pilar (LPP account) contributed to monthly by the employer, but only a vested benefits account (libre passage/Freizügigkeitskonto)? I was thinking of pledging both 2nd pillar accounts held at different institutions, but it might not be possible without a withdrawal then?
Pledging is not the same as withdrawing.
Pledging (= nantissement) means that the money stays in your 2nd pillar account. If there is a lower limit of 20k for that, I would think that you can make a voluntary contribution to reach this amount and enable pledging.
However, the pledged amount probably does not count (as downpayment) in the same way as money withdrawn and provided directly « on the table »; check with the mortgage provider.
You can pledge any amount from the 2nd pillar, also less than 20k. The pledged assets stay where they are, either in the pension fund or in a vested benefits account. Usually banks count 90% of the pledged assets but don’t count it towards amortization. So if you buy something for 1M with 100k cash and 111k 2nd pillar pledged, you’ll meet the 20% own capital criteria but still have to amortize from 900k down to 666k within 15 years.
2nd pillar withdrawals don’t only count as own capital but also result in a lower mortgage and thus lower amortization requirement. If you bring in 100k cash and withdraw 100k from the 2nd pillar, your mortgage is effectively at 800k and thus 100k less to amortize within the next 15 years.
@PhilMongoose
Every pension fund I encountered so far prevents you from withdrawing anything after a buy-in. A lot of them even have a 5 year block in their regulations (for example SwissLife managed pension funds do this).
I didn’t understood the “down to 666k within 15 years” sentence Cortana, where the 666K comes from in the calculation? The rest and the role of pledging in amortization is very clear, thanks!
You need to reduce the mortgage down to 2/3 of the market value within 15 years.
So yoi need to bring down the mortgage from 900k (pledging) or 800k (no pledging) to 666k (2/3 of 1 Mio) within 15 years.
Thank you for the explanation, it’s very instructive! You would rather suggest to withdraw from pillar 2 when possible, and do buybacks asap? We are really thinking about pledging both now, as we guess that it may be more profitable for us to keep buying VT after the purchase rather than doing buybacks, but I haven’t made the full calculation. We’re also still pretty young (late twenties) and wonder if a withdrawal from my 2nd pillar resulting in taxation and the need to do buybacks rather than investing in ETF’s may not cost more than the actual additional interests on the extra 10%. Will run a calculation within the next days
Did I understand it correctly that pillar 2 pledges are only for those cases where you can’t provide a 20% down payment? So for a 1m house, you could do:
My experience is that different banks can handle pledges differently (it may also vary by the skills of the advisor asigned to you and their ability to negociate good terms for you with their bank). My bank won’t consider 3a pledges as own funds (neither hard nor soft), for example.
I’m sure I could get a better deal by pressing more but it’s something to take into account when negociating the mortgage conditions.
AFAIR VIAC was offering “100% mortgage” by using the trick of pledging 2nd and 3rd pillars instead of own funds. So it seems to be that everything is possible.
The goal of pledging is to go around the down payment requirements. If you meet these requirements, you don’t need to pledge. Theoretically if you pledge your 2nd and 3rd pillars, your loan is less risky and the interest on your loan should be lower - but no bank is going to offer you such a deal, of course.
Going with VIAC seems to be the best then, they seem to offer the same rates to everyone. Wondering if it’s worth calling other banks as their deal seems really good
I would like to go with VIAC for one of my properties, however, it is a rental property and VIAC only offer for owner occupied. Anyone know of good options for rental properties?
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