Could your two-pot savings unlock your first property?

• Two-pot savings could boost a home deposit, reduce the bond required and potentially strengthen a buyer’s home-loan application.
• Withdrawals are taxable, so the amount available in your savings pot is not necessarily what reaches your bank account.
• Every rand withdrawn loses future compound growth, meaning today’s property deposit could carry a substantial long-term retirement cost.

Could retirement savings get you onto the property ladder?‍

For many first-time buyers, the biggest barrier to homeownership is not the monthly bond repayment. It is finding enough cash upfront for a deposit and the other costs of buying. South Africa’s two-pot retirement system has created another potential source of that capital.

Introduced in September 2024, the system allows qualifying retirement-fund members to access money accumulated in the savings component of their retirement funds before retirement, subject to applicable rules and tax.

Billions of rands have subsequently been withdrawn, much of it reportedly used for debt, education and everyday household expenses rather than asset purchases.

For Leonard Kondowe, National Manager for Rawson Finance, this highlights the financial pressure facing households, but also raises an important question for aspiring property buyers.

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“You'd expect people to reach for this money when they're building something, a home, an asset that grows.” Instead, he says, much of the money has gone towards debt and getting through the month.

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“It also means the one use almost everyone predicted, a deposit, is the road far fewer people are taking. Which is a pity, because it is one of the soundest.”

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But using retirement savings for property is not automatically a good investment decision. Buyers need to compare what the withdrawal achieves today against what it could cost them tomorrow.

What you'd actually be dipping into‍

Under the two-pot system, qualifying new retirement contributions are broadly divided between a savings component that can be accessed before retirement and a retirement component preserved for retirement.

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The key point is simple: Your savings pot is still retirement money. “The mistake I see most often is people treating the savings pot like an annual bonus,” Kondowe says. “It isn't. It's your own retirement money, brought forward.”

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For a potential property buyer, that means the decision should not be: I have money available, so should I spend it? It should be: Will using part of my future retirement wealth today leave me financially better positioned overall?

What a bigger deposit could achieve‍

Used strategically, a deposit can improve the economics of a property purchase. A larger deposit could:

• Reduce the bond required and therefore lower monthly repayments.
• Reduce total interest paid over the life of the home loan.
• Strengthen the loan application by reducing the lender’s exposure.
• Potentially improve the interest rate offered by the bank.
• Create immediate equity in the property from day one.
• Help a buyer avoid financing virtually the entire purchase price.

“A deposit signals commitment, and lenders respond to that,” Kondowe says.

Over a 20-year bond, even a modest improvement in the interest rate can translate into meaningful savings. That is the potential upside. But it needs to be weighed against some significant costs.

The costs people underestimate

1. You won't necessarily receive the balance you see
Savings-component withdrawals are subject to tax. The amount reflected in your retirement savings component should therefore not automatically be treated as the amount available for a property deposit.

Before making an offer on a home, establish the expected net withdrawal after tax and any applicable deductions.

2. You're giving up compound growth
This is potentially the biggest hidden cost. Money withdrawn today stops earning investment returns inside the retirement fund.

For a younger buyer with decades until retirement, the eventual opportunity cost could be several times the amount originally withdrawn, depending on investment performance and the time remaining until retirement.

3. Buying property creates new costs
A deposit is only the beginning. New homeowners also need to budget for costs including:

• Rates and taxes
• Levies where applicable
• Building and household insurance
• Maintenance and repairs
• Security
• Utilities
• Moving expenses
• Furnishing and improvements
• Unexpected property expenses

Draining accessible savings to secure the property can therefore leave a buyer asset-rich but cash-poor immediately after moving in.

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“People run the numbers on what they're getting and forget to run them on what they're giving up,” Kondowe says. His advice is to calculate both: the cash received today and the future value potentially sacrificed.

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So how do you weigh it up?‍

A two-pot withdrawal may be easier to justify when it supplements an already healthy deposit rather than becoming the only reason a buyer can afford the transaction. Before withdrawing, prospective buyers should ask:

• Would I still comfortably afford the monthly bond without future withdrawals?
• What will I actually receive after tax?
• How much will the deposit reduce my monthly repayment?
• Could the deposit secure a better interest rate?
• How much future retirement growth am I sacrificing?
• Will I still have an emergency fund after buying?
• Can I comfortably cover rates, levies, insurance and maintenance?
• Could I still afford the property if my monthly expenses rise?

One warning should carry particular weight. “A deposit shouldn't be the thing that makes an unaffordable home affordable,” Kondowe cautions.

If draining retirement savings is the only way to make the purchase work, the property itself may simply be too expensive. Buyers should also stress-test their finances rather than relying only on the current bond repayment.

A tool, not a windfall‍

The two-pot system provides financial flexibility, but accessibility does not mean the money should automatically be withdrawn.

There is an important distinction between using retirement capital strategically once to acquire a long-term asset and treating the savings component as an annual source of spending money.

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“There's a real difference between a decision and a habit,” Kondowe says. “Withdrawing once, on purpose, towards something that lasts is a decision.”

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Repeated withdrawals are another matter. “Going back every March because the new tax year has opened is a habit, and it's a habit that can cost people their retirement.”

Property today or retirement wealth tomorrow?‍

For first-time buyers, the two-pot system creates a genuine financial choice. Using part of the savings component could:

• Get you onto the property ladder sooner.
• Increase your deposit.
• Reduce your mortgage.
• Lower monthly repayments.
• Potentially improve your home-loan rate.
• Start building equity in a property.

But withdrawing also means:

• Paying tax on the withdrawal.
• Reducing retirement capital.
• Sacrificing years of compound investment growth.
• Potentially weakening your future retirement position.
• Leaving yourself with less accessible financial protection.

This is therefore not simply a choice between “retirement savings or buying property.” It is a decision about where your long-term wealth should sit.

Before withdrawing, calculate the after-tax amount, establish exactly what the deposit saves you on the bond, estimate the retirement growth being sacrificed and make sure you still have sufficient emergency cash after the purchase.

If those numbers work, using a portion of two-pot savings could provide a valuable bridge into property ownership.

But the principle should remain clear: Use your two-pot savings as a strategic financial tool, not a windfall. A home may build wealth for your future, but so does the retirement money you're giving up to buy it.

This is much stronger for online consumption: quicker opening, shorter sections, more scan points and a clearer “what you gain versus what you give up” framework. I’d run this version rather than the longer one.

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