How to Use Your Severance Savings to Buy a New Home

Yes — you can use them to pay the down payment, make payments toward your mortgage loan, or even buy a new home outright.

Here we explain how this valuable savings fund can help you make the dream of owning your own home come true.

Table of Contents

What are severance savings and what are they for?

What can severance savings be used for?

Can you use your severance savings to buy a new home?

In what cases can you use your severance savings for real estate investments?

Can I withdraw my severance savings to buy a home abroad?

How can you use your severance savings?

Use your Severance Savings for the down payment on your new apartment

Use your Severance Savings to pay off a mortgage loan or housing lease

Use your Severance Savings to pay taxes and notary fees on your new home

What is the process to withdraw your severance savings to buy a home?

Purchase certification

Employer authorization

Processing the request with the severance fund

If you're self-employed

Where can you withdraw your severance savings?

What types of real estate projects can you invest your severance savings in?

What are severance savings and what are they for?

Severance savings (cesantías) are a fundamental social benefit in Colombia. Simply put, they represent savings you accumulate throughout your working life.

Their main purpose is to give you financial backup in times of great need, such as losing your job. However, the law allows you to use them for other important purposes, with housing investment being one of the most common and significant.

Your employer deposits your severance savings annually into a severance fund. By law, the amount corresponds to one month's salary for each year worked.

What can severance savings be used for?

Knowing what you can use your severance savings for helps you plan your financial future by putting your savings toward things that truly improve your quality of life. Besides serving as a safety net if you become unemployed, the law also allows you to use them for:

Buying a home: Whether for the full payment, a down payment, or a significant payment toward your property.

Building or renovating a home: If you dream of building your house from scratch or improving the one you already have.

Buying a lot: To secure the land where you plan to build your future home.

Paying or making payments toward mortgage loans: To reduce your debt and the interest on your home loan.

Education: For your own professional training, or that of your spouse or children.

Withdrawal due to termination of employment: Your main financial backup if you lose your job.

It's worth knowing that self-employed workers also have the option to voluntarily join a severance fund and enjoy these same benefits.

Can you use your severance savings to buy a new home?

Absolutely, yes!

Withdrawing your severance savings to buy a new home is one of the smartest, most common, and most beneficial ways to use this savings fund in Colombia.

Your severance savings give you the flexibility to make significant contributions that can reduce the amount of your mortgage loan or even lower the down payment on your new house or apartment, making it easier to access your first home or a new investment.

Your severance savings are the first step toward buying your new home.

You can cover the rest of the property's value with a mortgage loan, taking advantage of the financing terms that best fit your budget.

Can I withdraw my severance savings to buy a home abroad?

The short answer is: legally it's very complicated, and in practice it's almost always a "no" when it comes to partial withdrawals.

However, if you're a Colombian living abroad, you can find programs that help you buy a home IN Colombia using your savings — not to buy a home where you currently live.

If you're Colombian or a foreigner looking to buy a home in Colombia, reach out to the sales advisor for whichever Arquitectura y Concreto project you like best; she will give you all the information you need for your purchase.

How can you use your severance savings?

If you're not an expert and you're thinking about investing your severance savings, here's how you can do it:

Use your Severance Savings for the down payment on your new apartment

You can use your severance savings directly to cover the down payment on your new home. This is especially useful, since the down payment is usually one of the largest expenses when buying a property.

By putting your severance savings toward the down payment, you reduce the amount you need to finance through a mortgage loan, which translates into lower monthly payments and a lower total loan cost over the long run.

If you're married or in a common-law relationship, you can combine both partners' severance savings to buy your new house or apartment, as long as both of you appear on the deed or contract.

Besides buying your own home, you can also invest your severance savings in housing projects as a strategy to generate rental income, turning your savings into a source of future profitability and returns.

Buying a new home as an investment is a smart decision, since it combines the security of property ownership with growth potential and value creation.

Use your Severance Savings to pay off a mortgage loan or housing lease

If you're already paying off your apartment and want to finish paying it off as quickly as possible, you can use your severance savings to do so.

You can use your severance savings as a payment toward the principal, withdrawing them automatically each year to pay the bank directly. This shortens the loan term or lowers your monthly payment.

You can also use them to pay overdue installments, to catch up with the bank, or to avoid foreclosure proceedings.

Use your Severance Savings to pay taxes and notary fees on your new home

Buying a house or apartment isn't just about the value of the property. One of the most common questions is whether you can use severance savings withdrawals to pay for the "paperwork" costs of the deed, registration, and taxes.

Be very careful with this point:

According to Decree 1072 of 2015, Chapter 3, partial withdrawal of severance savings is meant for acquisition, construction, improvement, or releasing liens. Most severance funds reject requests that explicitly state "to pay the notary."

Severance savings in Colombia can be used to pay taxes (such as property tax) and notary fees on a new home, as long as the property is in the worker's name.

This withdrawal, authorized by law, lets you cover deed, registration, and tax costs, making it easier to buy a new home and improving the worker's financial health.

You can also use your severance savings to pay off a mortgage if you've already finished paying your loan but the lien still appears on your certificate of freedom and tradition.

Note: Be sure to get proper guidance from your project's sales advisor for this process.

What is the process to withdraw your severance savings to buy a home?

Over time, the process for withdrawing severance savings has become simpler, allowing both employees and self-employed workers to speed up the paperwork. If you're already sure about buying with us, you can ask one of our advisors to help make the process quick and easy.

For buying a home, the general steps are as follows:

Purchase certification

You'll need a document proving your intent to purchase. This is usually done through a promise of sale (promesa de compraventa) or a similar document certifying the property transaction.

If you need a purchase certification for an Arquitectura y Concreto project, we provide this document for you. It includes the necessary information along with the specific project you wish to buy.

Employer authorization

You'll need to ask your employer for a formal letter authorizing the withdrawal of your severance savings for the specific purpose of buying a home.

If you're self-employed, you don't need an employer's authorization — you sign the request yourself. (If you need this form for one of our projects, you can request it from your advisor.)

Processing the request with the severance fund

With these documents in hand, you need to go to the fund that manages your severance savings. You can do this in person, submitting physical documentation, or through whatever virtual channels the fund offers.

Nowadays, almost all funds allow you to do this 100% digitally. You need to send the scanned documents as a PDF, after which the fund enters a validation stage to respond to you (this usually takes between 2 and 5 business days to confirm the documents are valid).

It's a good idea to check directly with your severance fund to find out the available methods and formats for submitting documents.

If you're self-employed

Since you don't have an employer's letter, the fund will review your supporting documents much more strictly. For this, you'll need:

ID document: Original and a copy.

Promise of sale: Must be signed by you and the seller. If it's with a construction company, it must carry the trust's or company's seal. At Arquitectura y Concreto, our advisors will help you with everything you need for the paperwork.

Certificate of Freedom and Tradition: No older than 30 days (to prove the property exists and who the current owner is).

Withdrawal form: Each fund has a specific "Housing Withdrawal" form you can download from its website.

If you're thinking about applying for a mortgage loan as a self-employed person, we suggest first checking whether it's more advantageous to leave your severance savings in the fund.

Funds like the FNA rate self-employed applicants based on their "Contractual Voluntary Savings." If you withdraw the money right before applying for the loan, it could lower your credit score and affect the amount the bank is willing to lend you.

Where can you withdraw your severance savings?

You must withdraw your severance savings directly from the fund where they're deposited each year. In Colombia, the main entities that manage these funds are:

Protección

Porvenir

Colfondos

Fondo Nacional del Ahorro (FNA)

Skandia

What types of real estate projects can you invest your severance savings in?

You can invest your severance savings in whichever real estate project best suits your needs, preferably in Colombia. Arquitectura y Concreto offers options for every investment profile in the country's highest-growth regions:

Antioquia: Where urban innovation and the development of exclusive areas let your severance savings grow into solid, high-appreciation assets over time.

Cundinamarca: With strategic projects in the capital and its surrounding areas, ideal for those seeking connectivity and strong residential demand.

Caribe: A bet on lifestyle and tourism, with projects in Barranquilla, Cartagena, and Santa Marta that turn your savings into a high-level investment.

This range includes everything from Social Interest Housing (VIS) to luxury properties in prime locations in Colombia's major cities, all depending on your savings and financing capacity.

Make sure to invest your severance savings wisely!

Before choosing a real estate project to invest your severance savings in, research the construction company's track record and reputation.

Although a real estate project can be a long-term investment if you buy off-plan, the last thing you want is for financial problems or insolvency to arise at the construction company before your new home is delivered.

At Arquitectura y Concreto, we hold 2 certifications that back up our track record and financial strength.

The Fitch Ratings score, an indicator of financial strength, gives you peace of mind that your investment is protected should the project be affected by unforeseen circumstances, ensuring you won't lose your money.

The "Best Place to Live" certification (carried out by independent entities that assess the satisfaction of our projects' buyers through random surveys). This certification shows that at Arquitectura y Concreto we have a strong commitment to our customers' quality of life and to excellence in the construction of their properties.

Investing your severance savings in housing is an important decision, and having professional guidance can make all the difference.

Our sales advisors, who specialize in housing projects, are trained to guide you through the whole process, from choosing the project to the paperwork needed to withdraw your severance savings to buy your new home.

If you're interested in an Arquitectura y Concreto project, you can request virtual or in-person visits to the projects that interest you and receive personalized guidance to answer all your questions. Our advisors will help you understand how to make the most of your severance savings to lower the down payment on your new apartment and make your payments more manageable.

Reach out to us and get information about our projects. If you still have questions about how to withdraw your severance savings to invest in new housing, the sales advisors for our real estate projects can give you all the detailed information you need to make good use of this benefit, which you're entitled to by law as an employee, or which you've saved up as a self-employed worker.