Great replies, many thanks (esp. Richard).

So my plan is...
I need 10% cash as deposit, plus another 10% which can be cash or pledge.

I actually can scrape together 20% in cash (just about - it's not an expensive house), but would like to pay a large lump of this into BVG this year to lower my taxable salary, thus save a significant amount of income tax. I know there are limitations on this, but I will be repeating what I did in the past 2 years, and there is space in the BVG for it.

So I will cash in existing 3rd pillars to get much of the cash for the deposit. I have checked the tax liability on this withdrawal on the ZH steueramt website (<5%). My understanding is that taking this now is not a bad thing, as the tax on that amount will not reduce over time and increases according to the amount withdrawn in one tax year. I also understand that having made this withdrawal (ie by closing the accounts) I will not be able to make another 3rd pillar withdrawal (from any other account) within 5 years (can you confirm that?).

From your comments, if I have a spare 6k left over I can also open a new 3rd pillar this year.

It all seems remarkably civilised and un-taxman-like.....

Thanks for your comments