Rajiv was well placed in his career. Still, in his early thirties, he had achieved more than what most of his peers could not even dream of. But somehow, not owning a home was looked upon as a vital void in his otherwise successful life. He kept on postponing his plans of homeownership. His parent’s constant nagging, urging him to buy a home was there for some time, but when his landlord for two years asked him to evacuate his rented furnished 2 BHK within a month’s notice, Rajiv was more than ready to take the plunge to own a home. But he did not want to pay a huge amount as EMI against his home loan. Instead, he wanted to make a hefty down payment so that the burden of his home loan interest is considerably less.
Rajiv’s dilemma and his parent’s urgency is nothing new. For previous generations, owning a home meant achieving life’s final milestone after landing a secured job. A home meant many things to them, like security and shelter. A home in one’s own name is also looked upon as a big asset to fall back upon in old age. On the other hand, millennials today prefer flexible mobility options to change jobs and cities and even countries. Owning a home will tie them down in one place. Also, financial freedom matters the most to many from Rajiv’s generation. They do not want to be burdened by EMIs based long term monetary obligations. And this was exactly what was going through Rajiv’s mind when he kept deferring his plan to purchase a home.
Rajiv, like many salaried individuals, was unaware of the facility of withdrawing from the Employees’ Provident Fund (EPF) to finance one’s home purchase. The money that you can withdraw can also be used as a down payment for your dream home. This withdrawal facility allows you to withdraw from your Provident Fund account for various purposes connected to a buying property–be it land or a home. You can withdraw from the balance of your PF account after fulfilling certain conditions and within certain limits. The scheme also allows you to withdraw to repay your home loan.
You Can Withdraw From Your Provident Fund to Buy Property
Like Rajiv, though most salaried individuals have a provident fund account that they regularly contribute to, a majority of them are unaware that they can withdraw from this fund.
There are various means by which one can accumulate the booty to build or buy one’s home— by borrowing from parents, friends or relatives, or availing home loan facilities. But if you are salaried, have an EPF account and have been contributing to it for at least five years, then you have one more route to buy your dream home.
You can withdraw money from your EPF account to either construct/ or purchase a house or buy a plot of land. If you or your spouse already owns a plot, you can withdraw the amount to build a house on that plot. The amount you will be eligible for, however, will depend on the purpose for which you are withdrawing the money.
|PF Withdrawal Reason||PF Withdrawal Limit|
|For purchasing a plot||24 months’ basic salary +DA|
|For building a house||36 months’ basic salary +DA|
|For buying an apartment or house||36 months’ basic salary +DA|
|For renovation purposes||12 months’ basic salary + DA|
|For home loan repayment||36 months’ basic salary|
You Can Avail PF Withdrawal Facility as Member of a Housing Society
If you are a member of a cooperative society or a registered housing society that has 10 or more members, you can avail of the PF withdrawal facility. The amount that you withdraw should be used to buy land for building a residential house from the government or any government-approved agencies. You can also avail of this facility if you are planning to buy or build a residential house. You can withdraw up to 90% of your total PF fund under this scheme, subject to the cost of the asset to be purchased.
As a part of the Central’s Government’s initiative to provide Housing for All by 2022, the EFPO (Employees’ Provident Fund Organisation) in association with the Ministry of Labour and Employment plans to provide 10 lakh affordable housing units by 2022. EPFO will not only help you be a proud homeowner by facilitating the withdrawal of funds from your EPF account but will also help workers and employees to buy their dream homes if they form a society of 10 or more members.
Under this scheme, the EPFO will play a pivotal role in bringing all stakeholders, like employers, employees, financial institutions, and housing agencies, to facilitate affordable housing for the workers.
You can Make PF Withdrawal for Home Renovation
If your home needs a renovation, additions or an extension, you are entitled to withdraw money from your PF account. This home may be owned by your spouse or by you or jointly by both. However, you can only avail of this facility after completion of five years of construction of the house. And, the good news is that this house may or may not be the same house that you had previously constructed by availing the PF withdrawal facility. Or it may be the same house too. The amount you are eligible to withdraw under this scheme is restricted to 12 months’ basic salary and Dearness Allowance (DA).
You Can Repay Your Home Loan by Availing of This Facility
You can avail of this withdrawal facility from the EPF account to repay the balance of a home loan taken by you or your spouse. You are eligible for this withdrawal upon completing 10 years of contributing to your PF account and the amount cannot exceed 36 months’ basic salary plus DA.
There are several avenues to fund the home of your choice. With plunging home loan interest rates, it is just a matter of being aware of the facilities that are made available today by the Government or various financial institutions, to make your dream home a reality.