How about Buying, Renovating, or Repaying Your Home Loan with PF Money?

In our salary break-up, the provident fund, commonly known as PF, is one of the most important components where both the employer and employee contribute 12% of the employee’s basic salary every month.

Until last year, only three years’ worth of wages could be withdrawn to invest in a property and that too just once.

Last year, the government modified the rules pertaining to the Employees’ Provident Funds (EPF) Scheme, 1952. While everything remained the same, a new paragraph 68 BD was added. As per this new paragraph, people could withdraw up to 90% of their PF amount for buying a property.

Wondering how to withdraw your PF for buying a home? Let us take you through the cases in which you can avail this service.

Case I: For buying home, land, and construction of a home

For buying land or constructing a home, you are eligible to withdraw a limited amount from your EPF account once in a lifetime. For land, the maximum permissible amount is 24 times the monthly wages. For buying or constructing a house, the maximum limit is 36 times the monthly wages, which includes the acquisition of land also.

However, there are certain conditions that should be met, which include:

• The property should be in your name or your spouse’s name or jointly in the name of you and your spouse
• You should have completed five years of service
• The property should be free from legal hassles
• The property should be registered, and proof of registration must be given

Case II: For repayment of existing home loan

For the repayment or rather prepayment of your home loan, you can withdraw your EPF money. However, you should have completed at least 10 years of service. Like the previous case, this can also be availed only once in your lifetime. You can withdraw up to 36 times of your monthly wages.

For availing benefits in this case, the following should apply:

• The property should be in your name or your spouse’s name or jointly in the name of you and your spouse
• A joint home loan with your sibling or even parents is not allowed
• A proof of house agreement, the sanction of home loan, and other documents as asked by the Employees’ Provident Fund Organisation (EPFO) office are mandatory

(Note: In this case, the amount can be taken from your contribution and employer contribution in EPF).

Remember: You can either withdraw money for buying a home or paying home loan but not for both.

Case III: For repairs/renovation of existing home

Did you know that you can use your EPF money for repairing or renovating your existing home? For this, the maximum amount you can take is 12 times your monthly wages. And this can also be just availed once. The conditions for these include:

• The house should be more than five years old from the construction completion date
• You should have completed 10 years of service
• The house should be in the name of self, spouse, or jointly with the spouse

(Note: This amount can be taken only from your contribution, not employer’s contribution.)

Now, let’s understand the process

While availing this service, you can only buy a property from the state or the central government or a housing agency under a housing scheme as notified by the Central Provident Fund Commissioner. In case you want to buy it from any other developer, you can just withdraw up to three years’ salary. The same rule also applies if you wish to buy a resale property.

All said and done, the provident fund is your retirement fund. Thus, it is advisable to use it wisely.