You can withdraw 90 per cent of EPF money to buy house, pay home loan EMI; here's how
In an effort to make its ‘Housing for all by 2022’ a success, the government has allowed for EPFO members to withdraw up to 90 percent of their provident fund (PF) accumulations to make down payments to purchase a house and to pay housing loan EMIs.. These will help 4 crore EPFO members to fulfil the dream of owning a house.
Take a quick look at the norms for PF withdrawal:
1) EPFO members will be able to withdraw up to 90 per cent of their accumulation (employer's as well as employee's contributions, including interest) in the PF account or the cost of the property, whichever is less to provide for the purchase or construction of house/flat or for buying land.
2)The rules, however, do not encourage secondary market or resale transactions of real estate properties.
Monthly instalments can be made from the PF money against any outstanding loan in the name of the EPFO member or spouse, provided both are EPFO members.
3) For payment of equated monthly instalment (EMI) through one's EPF account, banks or lending institutions will consider the contributions made to an employee's PF account over the past three months to calculate the EMI.
4) In case a member quits his job, the responsibility of repaying the loan would rest with the employee and not the EPFO.
5)Following are conditions to be met, to withdraw amount:
a) The employee is a member of EPFO for at least three years.
b) The rule applies to all those who, together with their subscriber spouse, have at least Rs 20,000 in their accounts.
c) It can be withdrawn only once.
6) Withdrawal from the EPF was possible earlier, but only after a person has been an EPFO member for at least five years. Earlier, EPFO members were allowed to withdraw up to 36 months of basic salary plus dearness allowance for purchase or construction of house/flat and 24 months of basic salary and dearness allowance for purchase of land.
7) Payment will be made by the EPFO directly to the housing society or the government agency or the bank or the prime lending institution, and not to the member of EPFO.
8) In case a member quits his job, the responsibility of repaying the loan would rest with the employee and not the EPFO.
9)If the member fails to get allotted a dwelling or a flat or in case of cancellation of the allotment, the amount has to refunded to the EPFO within a period of 30 days.
10) If the amount withdrawn exceeds the actual money spent, the excess money should be refunded in lump sum within 30 days of finalisation of purchase or construction of house or flat.
11) To withdraw money under this scheme, the EPFO member has to be a member of the co-operative society or a society registered under any law for housing purpose and should have at least 10 members. Withdrawals are also allowed for repayment of monthly installment of loan to a bank or any lending agency.