Paying off your mortgage? Real estate affordability

As a rule of thumb: Pay off a third of the property’s value by the time you retire. This reduces your obligations to the bank to two-thirds of the value. In our experience, this “security” will mean you can stop making regular repayment installments. Your financial institution’s credit regulations determine whether or not you can do this.

Your mortgage shouldn’t be too high or too low. For example, if you pay off your entire mortgage, you’re tying up a lot of capital. This could deplete your reserves and have double the negative impact on your return on investment. Firstly, because less capital is available to invest in things like securities, for example. And secondly, because you will be able to claim less debt and debt interest on your tax return.

You can build up capital via the 2nd pillar (occupational pension) or via pillar 3a. As an example, this includes voluntary pension payments. You can use this capital to pay off your mortgage later – either when you retire or even earlier.

Important in this context: Not all pension funds allow you to withdraw all your retirement savings as a lump sum. Find out which rules apply to you first. Many funds now allow you to withdraw half of your pension or even your entire pension as a lump sum.

Do you want to give your property to your children? Or do you want to sell your property? Maybe in order to buy another one? The latter scenario is interesting because you may benefit from a property gains tax deferral.

We always consider real estate and mortgage issues in the overall context of your financial planning. This also means that we plan for any impact on your taxes and advise you on how to protect yourself against any risks. What happens to your property in the event of death or disability? Please feel free to contact us for a non-binding initial consultation.