The 2nd pillar can be used in two ways in the context of a property purchase (main residence only):
- By early withdrawal of all or part of your second pillar.
- By pledging your second pillar.
In the first case, you build up part of your own funds by withdrawing a certain amount from your second pillar. It is important to note that this will reduce your pension benefits once the withdrawal is made. There is also a tax on the withdrawal of capital benefits (between 3% and 10% of the amount of the capital withdrawal made, depending on your marital status, the amount and the tax municipality).
In case of a full repayment of the withdrawal made, the taxes paid will be refunded. Using your 2nd pillar for home ownership may be more complicated if you have made a purchase in the three years prior to the capital withdrawal.
In the second case, you pledge your pension assets as collateral for the mortgage. There is no tax or reduction in old-age benefits. However, supplementary insurance cover is usually requested by financial institutions when granting a mortgage.