Business Desk – EPF Home Loan Withdrawal: If you want to use EPF i.e. Employees Provident Fund for Home Loan Prepayment or to repay its outstanding amount, then this can be done under certain conditions. The main objective of EPF is to prepare Retirement Corpus for employed people, hence the facility to withdraw money from it is given only for fixed needs.
These also include repaying the outstanding amount of home loan. However, before withdrawing money it is important to understand the eligibility and withdrawal limit.
What is the eligibility to withdraw money from EPF for home loan?
The employee withdrawing money from EPF for Home Loan Repayment must have completed at least 3 years of service. The property related to the house against which the loan is being repaid should be in the name of the EPF member. The house can be registered in the name of husband or wife or jointly in both their names.
Such withdrawals are normally permitted only once. Therefore, the decision to withdraw money from EPF should be taken keeping in mind your current needs as well as future financial planning.
How much money can be withdrawn from EPF to repay home loan?
An eligible EPF member can withdraw up to 90% of the total amount deposited in his EPF account to repay the outstanding amount of home loan. This facility is applicable in case the house is registered in the name of the member or jointly in the name of the member and his spouse.
However, having the facility to withdraw up to 90% of the account balance does not mean that it will always be beneficial to withdraw the entire available amount. The amount deposited in EPF can be an important part of financial security after retirement.
UAN and KYC necessary for EPF Withdrawal
Online Claim facility is available to withdraw money from EPF. For this, the member's UAN (Universal Account Number) should be active and the KYC information related to the EPF account should be correct and updated. Aadhaar, PAN and bank account information also need to be properly linked and verified in the EPF records.
How to claim EPF online?
To make online claim, first log in to EPFO's Online Services with the help of UAN. After this check the Aadhaar, PAN and bank account information in your account. After the information is correct and verified, go to the Online Services section and select Claim option.
Here select the correct withdrawal purpose and enter the requested amount. After this, fill the bank account information and if the system asks for any important document then upload it. After checking all the details thoroughly, submit the EPF claim.
Keep these things in mind before withdrawing money
Withdrawal of money from EPF to repay home loan can reduce the loan burden immediately, but it will also reduce your retirement fund. So just because up to 90% of the money can be withdrawn from the account, it is not necessary to withdraw the entire amount.
First assess the outstanding amount of home loan, interest rate, EMI, future needs and retirement planning. It is better to take the decision of EPF Withdrawal by striking a balance between need and long-term financial security.