EPF scheme is a social security scheme under which your investments will be set aside to help you after retirement, whereas having an own house will give you mental peace and security to you and your family.
But when it comes to answering the question that is it good wot withdraw PF for a home loan? then it depends on the individual.
If you have already had enough retirement funds and want to reduce your home loan burden then you can do that, but if EPF is only your retirement plan then the answer is strict No.
Why Employees Want to Withdraw PF for Home Loan
- Because at present it has become easy to withdraw PF advance amount online. maybe it is the main reason for most of the employees to withdraw it.
- The second reason is there is no need to repay the PF advance amount.
- The third reason is most employees don’t aware that they will get interest on their EPF accumulations ( mostly above 8.50%), which is higher than Fixed Deposit interest rates.
When Withdrawing PF for Home Loan is Good Idea
- When you already have invested in other retirement schemes like PPF, NPS or any mutual fund schemes.
- Home loan repayment will give you a tax benefit up to 1,50,000 Rs under section 80C and if you or your family members are living in that house then you can get a tax benefit up to 2,00,000 Rs as a loss from property under section 24 of the income tax act.
- If you feel that the interest rate of your home loan is very high and want to shift to another bank, in that case, you can prepay your home loan and shift your home loan to another bank.
When Withdrawing PF for Home Loan is Bad Idea
- When EPF is only your retirement investment plan.
- When you have already paid so many EMIs and when your interest cost is decreasing.
How Much EPF Advance Will be Given for Home Loan
- Under Section 68 BB of Employee Provident Fund and Miscellaneous Provision Act 1952, employees can get 36 months basic wage + DA or total of employee and employer share with interest, whichever is least.
- Minimum of 10 years EPF membership is required to withdraw the PF amount for the home loan payment.
- The certificate of outstanding home loan and interest from the agency has to be submitted to avail this facility.
How to Withdraw PF for Home Loan
There are two ways you can withdraw your PF amount for Home Loan one is in online method and the other one is an offline method.
- Go to the UAN member portal and login with your UAN number and password.
- Now go to online services and click on claim form 31, 19 and 10C.
- Now enter your bank account number and click on verify and proceed for the claim.
- Now select PF 31 advance form as a claim option.
- Now select the purpose for advance as the construction of the house, hence the home loan payment option is not yet present
- Now enter the amount of PF amount which you want to withdraw. (90% of employee + employer share or 36 months basic wage + DA whichever is least)
- Now enter your address and copy of the cheque or bank passbook.
- Now upload the certificate of out standing loan amount from your bank and submit your claim
- Download EPF composite claim form Aadhar and fill all the required details.
- Now tick the purpose for PF PART withdrawal as a home loan.
- Now enter the amount of PF which you want to withdraw for home loan.
- Finally, sign the form and submit it to your PF office along with the certificate of outstanding loan from your bank and your cancelled cheque or bank passbook copy.
How Much Time Will It Take for PF Advance Withdrawal
For online claims it will take 7-15 days and for offline claims, it will take 15-30 days to settle your PF amount for a home loan.
Also Read: How many times we can withdraw PF advance