There’s a close link between home ownership and retirement planning: Retirement savings can help you make your dream of owning your own home a reality. Amortizing your mortgage can contribute to a secure retirement. And a property can reduce your living costs or generate additional income in old age.
- Save for your own home with your retirement savings – what do you need to do?
- Use your retirement savings to buy a home – what are your options?
- Repay your mortgage in good time – how can you ensure your mortgage is affordable in old age?
- Use your property in retirement – how can you benefit from your property?
1. Save for your own home with your retirement savings
If you want to live in your own four walls you need to build up your equity in good time. Targeted retirement savings under pillar 3a are a first step towards owning your own home.
Let us help you find out how close you are to realizing your dream of owning your own home.
2. Use your retirement savings to buy a home
Residential property can contribute to your retirement provision. This is why you’re allowed to use retirement savings when purchasing a home. Either through an early withdrawal or in the form of a pledge.
- Early withdrawal: If you finance your property using an early withdrawal, your retirement savings will be reduced. Note that at least 10% of the property's value must be financed using equity that does not come out of your occupational pension scheme.
- Pledging: Alternatively, you have the option of pledging the capital. Your retirement savings merely serve as collateral. Furthermore, your benefits from pillars 2 and 3 are not reduced.
You can find specific aspects to think about, and help with making basic decisions when buying a home, at: Are you about to buy?
3. Repay your mortgage in good time
Reduce your interest payments by repaying your mortgage in good time. This will mean you can still afford your home even with a lower income during your retirement.
- Direct amortization allows you to reduce the amount of interest you pay. You can make early withdrawals of funds from pillar 2 and pillar 3a for this.
- In the case of indirect amortization, your savings remain in your retirement accounts. The mortgage stays the same and thus reduces your tax burden. The pledged funds will be used to settle part of your mortgage debt when paid out on your retirement.
Plan the repayment of your mortgage in good time. With Financing 50+ you can find out which topics are important here.
4. Use your property in retirement
The ownership of a house or apartment is generally an important part of your assets. Depending on how your housing needs to evolve, you have different options for using your property as retirement provision:
- You can continue to live in your own home
- You can rent out your property and receive additional income
- You can sell your property and gain additional liquidity
Whatever your situation, you should think carefully about how to use your property in your retirement years. We would be happy to advise you and help you make your decisions using our specialist knowledge and extensive experience.