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.
