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Old 28.06.2011, 12:22
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Pension to found 20% needed to buy

Hello,

Short Q: can I use the Pension savings for the 20% cash that I need to pay to buy a appt?
What kind of pension are we talking about? I have a private pension scheme by Profond, would this be ok to be used?

I know that there are some restrictions then, in the fact i wont be able to rent the appart out, right?
But if I put back the same money in the pension fund after the mortgage (if i 2 a 4 years mortgage fixed, then after 4 years), would I be able then to rent the appartment out?

Thanks!!
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Old 29.06.2011, 10:25
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Re: Pension to found 20% needed to buy

I got to know I can use the money from LPP (pension scheme) as funds, no problem at all.

My question is:

is there a law in switzerland where it says that the bank can use it as garantee without removing the money from the pension?

If i remove the money from the pension i will have to pay taxes on it (which would be reinbursed in case i bring back the money)..

thanks,
Giulio
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Old 29.06.2011, 10:30
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Re: Pension to found 20% needed to buy

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I got to know I can use the money from LPP (pension scheme) as funds, no problem at all.

My question is:

is there a law in switzerland where it says that the bank can use it as garantee without removing the money from the pension?

If i remove the money from the pension i will have to pay taxes on it (which would be reinbursed in case i bring back the money)..

thanks,
Giulio
There is a possibility to pledge your pension account against the 20% but in that case, if I remember correctly, the bank needs a life insurance from the borrower as security.
If you withdraw the money from the pension account for paying towards the 20%, I don't think you pay taxes, and if even if you do the tax rate is not as high. I am not sure about the numbers right now but it should be something like 1%.
Easy way, talk to the bank from where you are trying to get the mortgage. They should know it all.

Good luck.
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Old 29.06.2011, 12:10
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Re: Pension to found 20% needed to buy

This has been covered on other threads, but basically referring to your pillar 2 pension, you have two options:

1. withdraw the cash - this has various restrictions - at least 3 years must have passed since your last voluntary 'purchase' of additional years; you will be taxed on a rising rate (can be much more than 1% for larger amounts!); it may not be permitted by your specific pension fund institution; it must be repaid before further tax relief on voluntary 'purchase' can be received

2. pledge the pension - 3 year limit does not apply; no tax applies; pledge should be removed if no longer residing in house (e.g. renting out - consider if you could afford to pay off the pledge if you needed to move out in a hurry); of course as this is only a pledge, you have to actually borrow the cash as part of the mortgage so your interest repayments will be higher
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