Provident fund may get you a home loan!!

The Employees’ Provident Fund Organization, also known as EPFO is considering the decision of letting the subscribers pledge their future PF contributions to buy a house.  Here is how to use your Provident Fund to finance a home purchase. 

Purchase of a house/plot or Construction of the house:

Under the Provident Fund scheme, a subscriber can withdraw his PF money after the contribution of 5 years for the purchase or construction of house. The loan amount would depend on the purpose for which you are taking the loan. For purchasing a plot, the loan available shall be restricted to 24 months’ basic salary and dearness allowance (DA) and in case of the loan, to purchase or construct a house; availability shall be enhanced to 36 months of basic salary and DA. It is pertinent to note that the property cannot be purchased jointly with anybody else, except your spouse.

In case you withdraw from your provident fund account, the construction should begin within six months and be completed within 12 months of the withdrawal. In case you intend to buy a ready house, the purchase also needs to be completed within six months. The withdrawals for the purchase or the construction can be made in one or more installments, depending on the circumstances.

Subscribers can also avail the withdrawal facility again for additions or improvement of the house, only after 10 years from the first withdrawal, subject to the same eligibility criteria, vis-à-vis the amount.

Repayment of housing loan through Advances

For the repayment of the outstanding balance of home loan taken by you, the provident fund scheme allows you to avail of the withdrawal facility. The advance amount cannot exceed 36 months of basic salary and DA. This withdrawal can only be made for loans availed from specified entities like public financial institutions, Municipal Corporation, governments and state government, registered co-operative society, state housing board, nationalized banks, or a development authority.

The proposal, however, is in preliminary discussion stage and the government is exploring the possibility for providing a suitable low-cost housing scheme for subscribers of Employees Provident Fund.