Can you keep your mortgage after retirement?

Yes, provided your affordability is sufficient with retirement income (AVS/AHV + LPP/BVG + supplementary income). Banks recalculate affordability using the theoretical 5% rate. If charges exceed 33% of retirement income, the bank may require additional amortization before age 65.

How do banks calculate affordability at retirement?

Banks take into account the AVS/AHV pension (max. CHF 2,450/month per person in 2026), LPP/BVG pension, pillar 3a income, rental income, and investment returns. The calculation method remains identical: theoretical charges (5% + 1% maintenance + amortization) must not exceed 33% of total income.

Should you amortize more before retirement?

It depends on your situation. If your retirement income does not allow you to meet the 33% rule, additional amortization before age 65 is necessary. Ideally, planning begins 10 to 15 years before retirement. The goal is generally to reduce the mortgage so charges remain manageable with retirement income.

Can you take out a new mortgage after 65?

It is possible but more difficult. Banks are more restrictive because retirement income is generally fixed and lower than employment income. The maximum LTV is often reduced (60-65% instead of 80%). Some specialized banks are more open to this type of financing.

Should you use your LPP capital to repay the mortgage at retirement?

It is not mandatory but is a common strategy. Withdrawing 2nd pillar capital (instead of the annuity) to amortize the mortgage can be tax-advantageous in certain situations. However, this decision is irreversible and reduces regular retirement income. A comprehensive pension analysis is essential before making this decision.

Mortgage and retirement: affordability and strategies

Retirement represents a major turning point for managing your mortgage. With income typically reduced by 30 to 40%, affordability is recalculated and may require adjustments. Anticipating this transition is essential to keep your property with peace of mind.

The affordability challenge at retirement

At retirement, your income shifts from salary to pension benefits. In Switzerland, the three-pillar system in principle ensures the maintenance of approximately 60% of your last income:

1st pillar (AVS/AHV): Maximum pension of CHF 2,450/month per person (2026), i.e., CHF 29,400/year. For a couple, the maximum is CHF 3,675/month (capped at 150%)
2nd pillar (LPP/BVG): Pension calculated on accumulated capital and the conversion rate (6.8% for the mandatory portion). The amount varies considerably depending on career history
3rd pillar: Supplementary capital or annuity depending on choices made

Banks apply the same affordability calculation as before retirement: the theoretical 5% rate, plus 1% maintenance, plus any amortization, must not exceed 33% of retirement income.

Concrete example

Let us take a couple owning a property worth CHF 1,000,000 with a mortgage of CHF 670,000 (1st lien only, 2nd lien fully amortized):

Item	Annual amount
AVS/AHV pension couple (max.)	CHF 44,100
LPP/BVG pension couple (estimate)	CHF 45,000
Supplementary income (3a, wealth)	CHF 10,000
Total retirement income	CHF 99,100

Theoretical charge calculation:

Charge	Annual amount
Theoretical interest (5% x 670,000)	CHF 33,500
Maintenance (1% x 1,000,000)	CHF 10,000
Amortization	CHF 0 (1st lien only)
Total charges	CHF 43,500

Charge-to-income ratio: CHF 43,500 / CHF 99,100 = 43.9%. This ratio exceeds the 33% threshold, meaning the bank will require additional amortization before retirement to reduce the mortgage.

To meet the 33% threshold, the maximum allowable charges are CHF 32,703. The mortgage would need to be reduced to approximately CHF 454,000 so that theoretical interest (CHF 22,700) + maintenance (CHF 10,000) = CHF 32,700 stays below the 33% threshold.

Strategies to prepare for retirement

1. Voluntary early amortization

The most straightforward strategy is to voluntarily amortize the 1st lien before retirement. By starting 10 to 15 years in advance, the annual amounts remain manageable. For example, to reduce the mortgage by CHF 216,000 over 15 years, you need to amortize approximately CHF 14,400/year.

2. Building capital via pillar 3a

Maximizing pillar 3a contributions during the final working years allows you to build capital dedicated to mortgage repayment at retirement. With annual contributions of CHF 7,258 (2026 cap) over 15 years, the accumulated capital reaches approximately CHF 115,000 to 120,000 (with a modest return).

Opening multiple 3a accounts (up to 5) allows staggered withdrawal over several tax years, reducing the capital withdrawal tax.

3. 2nd pillar capital withdrawal

At retirement, it is possible to withdraw all or part of the 2nd pillar (LPP/BVG) capital (subject to pension fund rules) to repay the mortgage. This option offers several advantages:

Immediate reduction of mortgage debt
Taxation of withdrawn capital at a preferential rate (capital tax)
Reduced interest charges for the rest of retirement

However, a capital withdrawal permanently reduces the LPP pension annuity, which can pose problems in the long term. An actuarial analysis is essential to measure the impact on long-term income and longevity risk.

4. Indirect amortization and conversion

If you have been practicing indirect amortization via pillar 3a during your working life, the accumulated capital can be used at retirement to significantly reduce the mortgage. This is the moment when indirect amortization "materializes" as effective debt reduction.

5. Mortgage renegotiation

Retirement is an opportunity to renegotiate your mortgage terms. A mortgage broker can compare offers from multiple institutions to find the best conditions, taking your retirement profile into account.

When should you start planning?

The answer is clear: as early as possible, ideally 10 to 15 years before retirement. At age 50-55, there is still enough time to:

Assess the gap between current and projected retirement affordability
Put in place a suitable amortization plan
Maximize pillar 3a contributions to build repayment capital
Consider 2nd pillar buybacks (tax-deductible) if your pension fund allows it
Adapt your mortgage strategy (term, rate type) with retirement in view

Key considerations

Do not withdraw all 2nd pillar capital: Keep an annuity base to cover ongoing needs in the long term
Anticipate healthcare costs: Health insurance premiums increase with age and reduce disposable income
Consider the imputed rental value: Taxable income includes the imputed rental value of the property, which can affect taxation in retirement
Evaluate the option of selling: In some cases, selling and renting may be financially more advantageous than massive amortization
Consult a financial planner: Coordinating pension provision, mortgage, and taxation is complex and deserves professional guidance

Prepare for retirement: simulate your future affordability

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