What exactly does real estate financing through the second pension pillar entail?
Real estate financing via the second pension pillar is an interesting alternative to the traditional
mortgage loan for both employees and self-employed individuals. Instead of borrowing money from the bank, you draw capital from your insurer that you have saved—or will save—in the context of your supplementary pension plan.Even before reaching retirement age, you can already use the supplementary pension capital you are
building up via an ="71f155f7-4cf9-4f58-9ffe-57d8a25febbf" href="/node/258">IPT, " data-entity-type="node" data-entity-uuid="83ab52f1-fde1-4e10-8fff-abe308ddb0aa" href="/node/256">VAPZ, 49d6-4233-ac78-5a7500a2b321" href="/node/257">VAPZ-RIZIV, " data-entity-type="node" data-entity-uuid="0eceb35b-13f7-41a1-9968-613b9879201b" href="/node/259">POZ or 851b-4219-8f74-1db1362be433" href="/node/205">group insurance for the financing of a real estate project.The term ‘real estate project’ is very broad: your supplementary pension can be used for
>purchasing, building, renovating, refurbishing, or improving private real estate within the EEA> (the European Economic Area, so all EU countries plus Liechtenstein, Norway, and Iceland).What makes this form of financing so attractive?
Financing through the second pension pillar is possible for a wide range of real estate transactions
and for all types of real estate: a house, land for building, investment property, garage, etc. For example, you can also cover the (re)construction of a garden, terrace, or swimming pool with it. Moreover, there is no limit to the number of projects you can finance using this approach.Different ways of financing real estate via the second pension pillar
Advance withdrawal
This financing technique means that you receive an advance on your pension capital. Your insurer advances
part of the accumulated reserves, which you can use to finance a real estate project. Only when your supplementary pension is paid out will the saved capital be reduced by the advance you have already received.An advance withdrawal is inexpensive and accessible because you do not have to pay
notary fees or registration duties. You can also repay the advance in whole or in part at any time, without being charged an early repayment penalty.Because the maximum advance is usually between 60% and 70% of your already accumulated pension
reserves, advance withdrawals are mainly used as a supplement to a mortgage loan or for financing a smaller real estate project.Second-pillar loan (loan with reconstitution or bullet loan)
With a mortgage loan via the second pension pillar, you may take out an interest-only loan
based on your future to-be-accumulated pension capital. On the maturity date of your pension contract, you pay off the loan with the payout of the accumulated capital.Until then, you pay private interest annually on the withdrawn capital. Meanwhile
, through your company, you continue paying the premiums for your supplementary pension. Your pension capital keeps accruing returns in your supplementary pension plan.This technique therefore offers a win-win: you still enjoy a tax benefit on your
pension contract contributions, and you finance the repayment of your loan through your company, keeping your private expenses to a minimum. The interest you pay privately may also be offset against real estate income in your tax return. As an employee, you also benefit from tax advantages.A second-pillar loan can, in some cases, fully replace a mortgage loan and, just like an advance withdrawal
, it can always be repaid early.Pledging the death benefit or pension reserves
With this financing technique, a portion of your pension or death benefit is pledged to the financial
institution that is granting the loan for your real estate project. This serves as security for repayment of the loan if you should pass away and thus is an alternative to, for example, a mortgage protection insurance.Interested? Feel free to contact us for advice!
Not every insurer offers all these techniques for real estate financing via the second pension pillar
. The conditions and costs may also differ significantly depending on the insurance company behind your supplementary pension plan.We are happy to guide you through the various options and are pleased to explore what would be the
best choice in your specific situation.
