PF Account Holders: To avoid paying interest for a long time, people keep looking for the option of repaying the loan prematurely. The amount lying in the EPF account can be an alternative. Most people often think of paying off the home loan by withdrawing money from their retirement fund.
PF Account Holders : To avoid paying interest for a long time, people keep looking for the option of repaying the loan before time. The amount lying in the EPF account can be an alternative. Most people often think of paying off the home loan by withdrawing money from their retirement fund. But is it right to do so?
This depends on what your home loan interest rate is. If this is more than the interest received on your PF account, then you can think of repaying the home loan from EPF account. Let us know whether you can withdraw money from EPF account for home loan.
To repay home loan from retirement fund, keep your interest and age in mind
If the home loan interest rate is higher than the EPF rate, you can withdraw the home loan from your EPF account. Apart from this, even if you are in the initial phase of your career, you can choose this option because you will have a long time to deposit the money.
You can withdraw money from EPF to repay up to 90% of home loan.
EPFO allows withdrawal of maximum 90% of the deposited amount to repay home loan. However, for this it is necessary to complete 10 years of your service. Also keep in mind that you can withdraw money from EPF only if the home loan is taken from a nationalized bank, registered cooperative, National Housing Board. Under the Home Loan Pre-payment Scheme, EPFO members can make home loan payments from their EPF accounts. Remember that unless it is absolutely necessary, do not withdraw money from the PF fund.
How to withdraw money to repay home loan?
- Login to EPFO e-Seva portal.
- Enter Universal Account Number and Password.
- Click on Online Services.
- Claim through Form 31.
- Enter your bank information.
- Select the reason for the withdrawal.
- Upload your documents.
Don’t withdraw money if you don’t need it
Experts believe that one should avoid withdrawing money from PF unless it is very necessary. Interest is being given at the rate of 8.15 percent on this. The larger the amount withdrawn from PF, the greater will be the impact on the retirement fund. According to the rules, employed people have to deposit 12 per cent of their basic salary in PF account.
