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Use your complementary pension to buy, build or renovate a home

​Buying or (re)building a house or apartment is an expensive business. Many people therefore go asking their bank for a loan. But did you know that – pension scheme permitting – your complementary pension can help you a long way towards your goal? There are several options, of which an advance is the best known.

Advance

Taking an advance against the amount of your group insurance is probably the best known example of how you can use your group insurance for buying, building or renovating a home.  

In this case you use (part of) the already accrued reserves from your group insurance to finance your investment. In this way you don't have to wait until retirement age to take full advantage of your complementary pension.

More details on taking an advance 

 

Pledge

Pension regulations permitting, you can pledge your group insurance to the bank with which you sign a mortgage loan contract. In this way the group insurance serves as additional security for the repayment of the loan. Here too you come out ahead:

  • You may well be able to borrow more if the property is not sufficient as guarantee, as for example in the case of a major renovation.
  • You don't pay any mortgage guarantee and no mortgage registration.

This solution offers no tax advantage, but is in principle free of charge.

 

Alternative outstanding balance insurance

If your group insurance comes with death in service coverage, you can in some cases use the amount of your death in service cover as an alternative to outstanding balance insurance.

This means that should you die before the end of your mortgage contract, the death in service benefit from your group insurance will be paid, not to your beneficiaries, but to your credit institution to repay the outstanding debt. Any remaining balance will then be paid to your beneficiaries.

This means that, for the portion of your mortgage covered by the death in service insurance, you will not need to take out outstanding balance insurance. 

 

Reconstitution of the mortgage loan

The reconstitution of a mortgage loan (reconstitution loan or 'endowment mortgage') is an alternative to the traditional mortgage loan.

In this case you sign a mortgage loan, but pay only interest, while the principal of the loan is repaid with the retirement capital from your group insurance. In this way your group insurance is linked to a mortgage loan and used for reconstituting the borrowed capital.