Ease your Home Loan with EPF

Having to own our own home is definitely a milestone in our life. It is probably one of the biggest investment for most of us. However, with the current economy and higher cost of living, many are afraid to commit. It’s not that they are unable to afford the repayments but most of them have the fear of not being able to service the repayments during difficult times. Do you know that you can actually withdraw from your EPF Account 2 funds to help service your monthly repayments or reduce your home loan?

Below is a simple table on the functions of an EPF Account. Account 1 consists of 70% of your funds while Account 2 is 30%. You can read here for more details on EPF withdrawal. In this article, we will focus on the home mortgage withdrawal.

Many perceive that the withdrawal for home mortgage from Account 2 can only be done within the first 3 years of purchase of their property. There are actually 3 types of withdrawal:

1) Withdrawal to Purchase/Build a House can be done within 3 years from the date of the signed Sales & Purchase Agreement with the condition that you have never made any housing withdrawal. However, you can actually still make withdrawal for your next house, only provided if you have lost ownership for the first house. Proof of disposal must be submitted.

2) Withdrawal to Reduce/Redeem Housing Loan can be made for any house of your choice if you have not made any types of withdrawal before. If you have made prior withdrawal, you can still withdraw under any category for the same house until you have lost ownership for it. Withdrawal can be done ONCE ANNUALLY from the previous date of withdrawal. You can decide on the amount of withdrawal as well.

3) Housing Loan Monthly Instalment Withdrawal is similar to the above, except that the withdrawal under this category is paid out on a monthly basis. Similarly, this withdrawal can be done for any house of your choice, provided you have not made any types of withdrawal before. If you have, you can still withdraw under any category for the same house until you have lost ownership for it.
*Update* Disclaimer: Your respective bank has the right to determine the tenure of withdrawal. (Credit to our reader for this information)

Here are the few simple steps to make withdrawal under the 2nd and 3rd category!

Do note that despite having this option available, such withdrawal will greatly reduce your retirement fund. This will in turn affect your opportunity to gain compounding interest. It will be advisable to perform such withdrawal only if you’re having financial difficulties. Do contact a financial advisor prior to your decision!

Here’s an additional tip: You can download the EPF I-akaun app on your phone for easy access to your account information including the amount available for withdrawal. The app is available for both IOS devices and Android devices, to make things more convenient for you, below are the download links. We hope you have benefited from this article!