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Old 15.01.2018, 14:31
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Mortgage pledged with second pillar - rent property out?

Hi all,


A couple of years ago I bought my home property and when negotiating my pillar accepted to pledge my second pillar, even I had 20% without it.
Now I am envisaging to rent out the flat.


First question. I understand that with my current mortgage it will not be possible - is that correct or is there a way?


Second question, what advice would you give to go to my bank and try to renegotiate this aspect of my mortgage?


Thanks for your help
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Old 15.01.2018, 15:00
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Re: Mortgage pledged with second pillar - rent property out?

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Hi all,


A couple of years ago I bought my home property and when negotiating my pillar accepted to pledge my second pillar, even I had 20% without it.
Now I am envisaging to rent out the flat.


First question. I understand that with my current mortgage it will not be possible - is that correct or is there a way?


Second question, what advice would you give to go to my bank and try to renegotiate this aspect of my mortgage?


Thanks for your help
Replace the pledge with cash, the pledge is for main home only so clearly cant be rented
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Old 15.01.2018, 15:07
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Re: Mortgage pledged with second pillar - rent property out?

Thanks - but I don't have as much cash as there is in my 2nd pillar.
So am I screwed?
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Old 15.01.2018, 15:08
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Re: Mortgage pledged with second pillar - rent property out?

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Thanks - but I don't have as much cash as there is in my 2nd pillar.
So am I screwed?
Live in the house or sell it.
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Old 15.01.2018, 15:11
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Re: Mortgage pledged with second pillar - rent property out?

With pledge you mean "verpfaendung"? So you never actually used the pillar 2 to finance the property?
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Old 15.01.2018, 17:11
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Re: Mortgage pledged with second pillar - rent property out?

Yes exactly, Verpfändung. It's like an additional security for the bank, that's all
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Old 15.01.2018, 17:13
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Re: Mortgage pledged with second pillar - rent property out?

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Yes exactly, Verpfändung. It's like an additional security for the bank, that's all
However the Bank can only call on that security if you don't breach the terms of the security. Expect you mortgage to be recalled in 30 days if you rent the property out.
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Old 15.01.2018, 17:15
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Re: Mortgage pledged with second pillar - rent property out?

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Yes exactly, Verpfändung. It's like an additional security for the bank, that's all
I think the bank takes it a bit more seriously than "that's all" - the only option you have is to replace that security with something else.

Unless you own ca. 20% of the value of your house in artwork, private companies or something else valuable, you're going to have to come up with hard cash.
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Old 15.01.2018, 17:27
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Re: Mortgage pledged with second pillar - rent property out?

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Yes exactly, Verpfändung. It's like an additional security for the bank, that's all
How much did you pledge, all of pillar 2?
Terms and condition should all be stated in the Verpfaendungs contract. Read it.

In the worst you must renegotiate your mortgage and will have a to pay higher interest plus a penalty for early renewal. Additionally the bank may ask you to increase the down payment from the usual 20% up to 30% or more.
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Old 15.01.2018, 17:28
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Re: Mortgage pledged with second pillar - rent property out?

check with you bank. maybe they don't care. they probably don't.
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Old 15.01.2018, 18:20
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Expect you mortgage to be recalled in 30 days if you rent the property out...
...and the bank finds out about it.

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check with you bank. maybe they don't care. they probably don't.
They should, because the use of 2nd pillar is controlled by law, so the bank doesn't really have any choice in the matter.
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Old 15.01.2018, 19:03
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Re: Mortgage pledged with second pillar - rent property out?

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Unless you own ca. 20% of the value of your house in artwork, private companies or something else valuable, you're going to have to come up with hard cash.
So, if we own 100+% of the value of our house in artwork, we can reduce the mortgage?

Tom
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Old 15.01.2018, 19:21
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Re: Mortgage pledged with second pillar - rent property out?

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However the Bank can only call on that security if you don't breach the terms of the security. Expect you mortgage to be recalled in 30 days if you rent the property out.
Huh? The bank will not call in your loan if you rent it out. I asked specifically if I could rent out my property and they confirm led that they don't care.

It's the pension fund that cares. If you use your pension fund it must be your primary residence.

Nouna, you need to talk to your bank and your pension fund. They are the only ones who can tell you what you can and can't do and/or Change conditions.
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Old 15.01.2018, 19:48
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Re: Mortgage pledged with second pillar - rent property out?

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Huh? The bank will not call in your loan if you rent it out. I asked specifically if I could rent out my property and they confirm led that they don't care.

It's the pension fund that cares. If you use your pension fund it must be your primary residence.

Nouna, you need to talk to your bank and your pension fund. They are the only ones who can tell you what you can and can't do and/or Change conditions.
Bank has ZERO security as ZERO deposit was made, the pension won't pay the pledge as it is in breach of the law to do so. Banks like more than 20% deposit for rental properties.....

I guess your deposit was in cash & in excess of 20% of market value of the property.

Since it's against the law to use the pension money as a deposit for a rental property, the pension company have no choice in the matter & can only say no.
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Old 15.01.2018, 19:53
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Re: Mortgage pledged with second pillar - rent property out?

And they will find out latest after a year when they send you your pension statement to a different address? Or gets returned because you moved and didn´t tell them the new address?
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Old 15.01.2018, 21:29
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Re: Mortgage pledged with second pillar - rent property out?

Thanks all!
Just to be clear: I don't want to do anything illegal, I guess I was more asking for advice on how to approach the topic with my bank.
Let's see then
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Old 15.01.2018, 21:38
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Re: Mortgage pledged with second pillar - rent property out?

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So, if we own 100+% of the value of our house in artwork, we can reduce the mortgage?

Tom
Well, according to this quote by Bob Hope, they may at least look on you more favourably
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Old 15.01.2018, 22:24
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Re: Mortgage pledged with second pillar - rent property out?

Even if you haven't any of your pension in your house, a lot of lenders (including mine) will stipulate the rent you have to charge to cover 'their' risk. The more you 'own' the lower the rent can be. When I made this enquiry (I own 25%) the rent they demanded was about twice the market rate. Basically... renting is for the 'financial institutions'.
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Old 15.01.2018, 22:27
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Re: Mortgage pledged with second pillar - rent property out?

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They should, because the use of 2nd pillar is controlled by law, so the bank doesn't really have any choice in the matter.
sure, if he withdrew the pension funds they would need to be paid back.

since the amounts were pledged and not withdrawn, i'm not sure if similar rules apply. afaict, the money is still in the pension fund.
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Old 15.01.2018, 22:29
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Re: Mortgage pledged with second pillar - rent property out?

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Even if you haven't any of your pension in your house, a lot of lenders (including mine) will stipulate the rent you have to charge to cover 'their' risk. The more you 'own' the lower the rent can be. When I made this enquiry (I own 25%) the rent they demanded was about twice the market rate. Basically... renting is for the 'financial institutions'.
Hardly surprising, you arranged an owner occupier mortgage & probably shopped around for a good rate, now you are a commercial borrower, different rules & not every lender will want the business.
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