Buying a home with your pension fund: what it really costs

You have found the flat. It costs 800,000 francs. The bank says the most it will lend you is 640,000. The gap is 160,000, and you have 90,000 in the bank.

At this point someone, often the bank itself, will mention your pension fund. The money your employer and you have been paying in every month since you were 25 is sitting there, it has your name on it, and Swiss law lets you use part of it to buy the home you will live in.

This article is about what that actually means. Not whether you should, which depends on your life, but what happens to the money, now and at 65, so you can decide with your eyes open.

First, what the bank needs from you

Three rules decide whether the flat is possible at all. They come from the Swiss banks' own guidelines, which their regulator has recognised, so every bank applies them.

Rule one: you bring at least 20 percent. The bank lends at most 80 percent of the value. On 800,000, that is 640,000 from the bank and 160,000 from you.

Rule two: at least half of that 20 percent has to be money that did not come from your pension fund. So 10 percent of the value, 80,000 on our flat, must be savings, a gift, an inheritance advance, a family loan, or 3a money. The other 80,000 can come from your pension fund.

Rule three: you have to pay part of the loan back. Within 15 years, the mortgage must be down to two thirds of the value. On our flat that is about 107,000 to repay over 15 years, roughly 7,000 a year.

There is also the affordability test, and this is the one that surprises people. The bank does not test the loan at today's interest rate. It tests it at 5 percent, adds 1 percent of the value for upkeep and 1 percent of the loan for repayment, and the total has to be under a third of your gross income.

What you can take from your pension fund

Your pension fund is the second line on your payslip, the one that says BVG or PK. It is an account with your name on it, and the law lets you take money out of it for a home you will live in yourself. Here is the shape of it.

• It has to be your home. Not a flat you rent out, not a holiday place. The one you live in.
• The minimum is 20,000 francs.
• Until you turn 50, you can take everything that is in there. After 50, the ceiling drops: at most what you had at 50, or half of what you have now, whichever is higher.
• You can do it up to three years before your pension would start. After that, the door closes.
• If you are married or in a registered partnership, your partner has to sign. The fund will not pay without it.

Back to our flat. If you are 38 and your pension fund statement shows 120,000, you could take 80,000 of it, put it together with your 90,000 in savings, and the 160,000 is there, with something left over for the notary and the moving van.

What it costs you, in the order you will notice it

1. A tax bill this year. The withdrawal is taxed straight away, on its own, at a reduced rate that depends on your canton. On 80,000 that is real money, and it is a separate bill, so budget for it. If you later pay the money back into the fund, you can claim that tax back, as long as you ask within three years of repaying.

2. Your pension gets smaller. This is the big one, and it is the one nobody feels for 27 years. The 80,000 you take out stops earning inside the fund. At 65, your pension is calculated from what is in the account, and 80,000 is not in it. Your fund can tell you what that does to your monthly pension. Ask before you sign.

3. Your cover for death and disability may shrink too. For many funds, what your family would receive if something happened to you is linked to the same account. The law says the fund must offer you extra insurance to close that gap. Ask what it costs.

4. You cannot top up your pension fund for tax purposes until the withdrawal is repaid. Paying extra into your pension fund is normally a good tax move. While the home money is outstanding, the tax office does not allow the deduction.

5. If you sell, the money goes back. Sell the flat and the amount you took has to be repaid to the fund, up to what the sale brings in once the mortgage is cleared. You can also repay voluntarily at any time until your pension starts, in steps of at least 10,000, and each repayment lets you reclaim the tax from point 1.

The two alternatives worth knowing before you decide

Pledge it instead of withdrawing it. You can leave the money in the pension fund and let the bank take it as security. Your pension stays whole, there is no tax bill, and your cover stays intact. In practice the bank then lends you more against that security, which means a bigger loan and more interest, and the pledged part still does not count toward the 10 percent that has to be your own money. For someone who can carry the larger loan, this often keeps more of the retirement intact.

Use your 3a first. Your 3a account, the private one you fill yourself for the tax break, can also be taken out for your own home, once every five years. And unlike pension-fund money, the bank counts it as your own money, so it helps with the 10 percent, not only with the other half. It is taxed on the way out too, at the same reduced rate.

How to look at it as one picture

The reason this decision is hard is that the two halves are 27 years apart. The flat is now. The smaller pension is at 65. Nobody can hold both in their head at once, which is why most people decide on the first half and hope about the second.

You do not have to hope. In SORVA you add the home as a goal, choose how much of the deposit comes from your pension fund, and the plan shows you both halves at once: the mortgage and the repayments year by year in your cash flow, and your retirement income at 65 with and without the withdrawal, next to your state pension and your 3a. Free during the public beta, at sorva.ch.

What to do this week

1. Ask your pension fund for two numbers: how much you could take out, and what your monthly pension at 65 would be with and without it. It is a routine request.
2. Ask the bank whether they would accept a pledge instead of a withdrawal, and what the loan would cost then.
3. Check what is in your 3a. Money there helps with the half the bank insists is yours.
4. Put the three versions side by side, withdraw, pledge, 3a first, before you fall further in love with the flat.

Common questions

Can I use my pension fund for a deposit if I am not Swiss?

The rules are about the home, not about you. It has to be a home you live in yourself, and the same conditions apply to everyone.

Is there a limit on how often I can do it?

For 3a, once every five years. For the pension fund, the fund's own rules apply on top of the law, so ask them.

What if my partner and I are not married?

Then each of you draws on your own pension fund, and there is no consent requirement, because the law only asks for a spouse's or registered partner's signature. But an unmarried couple buying together has other paperwork to get right first, and we wrote about that in Living together unmarried: what Swiss law leaves out.

Does the withdrawal count as income on my tax return?

No. It is taxed separately, at the reduced rate for pension capital, in the year you take it. It does not push the rest of your income into a higher bracket.

Educational information, not financial advice. Figures are for 2026 and may change. The worked example uses round numbers to show how the rules combine; your bank, your fund and your canton decide the actual figures.