An advance withdrawal from your pension fund before you retire is only possible under specific circumstances. One of these legally permitted circumstances is to finance a residential property for private use.
So far, so easy. However, you must observe a number of rules in order to make an advance withdrawal. Here is a non-exhaustive list: It is not possible to finance a land purchase without existing building plans. The money may be used to amortize a mortgage, but not to pay mortgage interest. The consent of your spouse or registered partner is required for an advance withdrawal. You may only use the money for renovations if the work maintains or increases the quality of living and the value of the property. If you are under 50, you can withdraw your entire savings until that point. If you are over 50, there are certain restrictions. You should also be aware that if you are insured and have made an advance withdrawal to finance a residential property for private use, you must repay the advance withdrawal before you can make any tax-effective purchases of pension benefits.
An advance withdrawal increases the equity for a residential property. As a result, you need less borrowed capital for your mortgage, which means you pay lower interest rates on your mortgage. Be aware that an advance withdrawal will negatively affect your pension. You have to expect a smaller pension when you retire. If you move out of or sell the property, you must repay the advance withdrawal. Furthermore, the amount you withdrew must also be taxed immediately. Upon repayment, you can claim a refund for these taxes (without interest).
We recommend that you consult your pension fund ahead of time. Extensive calculation tools are available for BVK customers in the myBVK portal.