Mortgages

"Can I use a Pillar 3a account to help with my mortgage in Switzerland?"

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You can use your Pillar 3a assets to support a property purchase in Switzerland, and this is actually one of the key benefits of the 3a system for those planning to buy a home.

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Under Swiss law, you are allowed to use the funds in your Pillar 3a account either for a direct withdrawal or as collateral (a pledge) to support the financing of an owner-occupied residential property. This must be a property that you intend to live in yourself, not a rental or investment property.

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  • Direct withdrawal means you take the money out of your 3a account and apply it directly toward your home purchase, typically to boost your deposit or reduce your mortgage. Be aware that this triggers an early withdrawal and is subject to a special withdrawal tax. The rate varies by canton and may be progressive depending on the amount.
  • Pledging (or using your 3a as collateral) means the money stays in the account, but the bank considers it as additional security. This can allow you to secure a higher loan-to-value ratio without needing to contribute as much cash upfront. The pledged amount continues to be invested and may grow tax-free, but you cannot access it freely unless released by the bank.

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Each option has pros and cons. Direct withdrawal reduces your retirement savings but boosts your equity and lowers your loan. Pledging preserves your retirement assets and tax benefits, but may result in higher interest costs as the mortgage remains larger.

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You should also note that different mortgage lenders may have their own policies around how 3a funds can be used. It is always worth comparing offers and confirming terms.

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Please note that all content within this response has been prepared for information purposes only. This response does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.