PF Withdrawal For Home Loan Repayment; A Detailed Guide
PF for Home Loan: It is everyone’s dream to have their own house. To fulfill this dream, many people resort to home loan. The tenure of home loan is very long. Due to this, a large part of the monthly income of employed people goes in paying the EMI of the loan. In this situation, some people also plan to repay the home loan with the money of Employees Provident Fund (EPF).
If you also want to repay home loan with EPF, then you must keep some things in mind.
Pay attention to the difference in interest
EPF is usually one of the schemes that pays the highest interest. But, if the interest rate on your home loan is higher than the interest rate on EPF, then you can use this amount for the pre-payment of the loan. For example, the interest rate on EPF is 8.25 percent right now.
At the same time, most banks are offering home loans at a rate of 8.5 to 10 percent. If the rate of your home loan is 9 percent or more, then only you should consider the option of pre-payment of home loan with EPF money.
Age and career are also important factors
If you are young and in the early stages of your career, then you can choose the option of repaying the home loan (EPF Withdrawal process) with EPF money, as you will get enough time to prepare a retirement fund again.
EPFO allows a maximum withdrawal of 90 percent of the deposit amount to repay the home loan. But, for this you will have to fulfill the condition of at least 10 years of service. Under the Home Loan Repayment Scheme, EPFO members can pay EMI from their account.
How much money to withdraw from EPF?
EPF is an important part of your retirement planning, so you should think well before withdrawing money from there. It should generally be tried only as a last option. Also, you should avoid withdrawing the entire amount from EPF. This can ruin your retirement plan.
It is currently getting 8.25 percent interest. The more money you withdraw from EPF, the more impact it will have on your retirement fund. Also, you should understand the tax rules well while withdrawing money from EPF. In some cases, tax may also have to be paid. Also, penalty may have to be paid for withdrawing money before time.
How to withdraw money from EPF for home loan?
- Login to EPFO e-service portal.
- Enter UAN and password.
- Click on Online Services.
- File your claim through Form 31.
- Verify your bank details.
- Select the reason for withdrawal.
- Upload the relevant documents.
