What You Need to Know About Utilizing Your EPF to Buy a House
Buy a house using EPF
Withdrawing money from your EPF account to buy a house comes with benefits as well:
Affordable monthly installment
Withdrawing money from your EPF accounts to pay for downpayment will help you release your financial burdens by paying lesser monthly instalment.
Save on housing loan’s interest rate
You can use the money you withdrew from your EPF account to pay off the high interest rate and save the remaining interest cost to fund other miscellaneous costs.
You can pay for your spouse’s home loan and help reducing his or her financial burden.
Withdrawing money from your EPF do come with some drawbacks as well, such as:
After withdrawing money from your EPF account to buy a house, your retirement plan will surely be affected. So make sure you have other retirement savings or plans before deciding on withdrawing money from your EPF account to buy a house.
Reduced dividend earning
When you withdrawing a huge sum of money from your EPF account, you are also earning less from the dividend earnings of 5%-6% per annum.
Account 2 money withdrawal
You are only allowed to withdraw money from Account 2 and not Account 1 where it holds majority (70%) of your monthly contributions.
After thinking through the pros and cons, here comes the application. You are allowed to apply if:
- You hold a Malaysian citizenship;
- You are a permanent resident;
- You are a non Malaysian who was once an EPF member prior to 1st August 1998;
- You are under 55 years old with a minimum of RM500 in your EPF Account 2;
- You just signed a Sale and Purchase Agreement lesser than three years ago and intending to buy a residential property with cash or housing loan.
Next question would be how much money can you withdraw from your EPF account? This will then depend on the details of property purchased:
100% home loan
If you have secured yourself a 100% home loan from the bank, the maximum amount you can withdraw from your EPF account will be 10% of the property’s price to help you pay with other upcoming fees.
Buying a home on your own
If you are buying a property on your own, you are allowed to withdraw the difference between the loan amount approved and the price of property, with an additional of 10% property’s price. Or you could withdraw all your money in Account 2, whichever that is lower and more than RM500.
Buying a home with your spouse or family member
If you are buying a property with one of your immediate family members or wife, you are allowed to withdraw the difference between the loan amount approved and the price of property, with an additional of 10% property’s price. Or you could choose to withdraw money from both your and your wife’s or family member’s Account 2, whichever that is lower and not lesser than RM500.
Buying with only cash and no loan
If you are not applying for any bank loans and intend to pay with cash, your withdrawal limit would be the property’s price with additional 10% or all your money in Account, whichever than is lower and not lesser than RM500.
Lastly, you will need to bring along these documents when you apply to withdraw money from your EPF account to purchase a house:
- KWSP 9C (AHL) (D5), could be done online or fill in the form that can be found online
- Identification Card
- Bank Statement
- Sale and Purchase Agreement
- Proof of relationship to your family members if you are applying for joint applications
- Certificate of Fitness (for new developments)
- Dead of Assignment (for property with no title)
Make sure you prepare and complete all the documents beforehand to avoid getting your application rejected.
With all the advantages it will come with disadvantages as well. There are a few limitations if you wish to withdraw money from your EPF account to buy a house:
Prohibited for investment purpose
You are not allowed to withdraw money from your EPF account to buy properties for investment purpose. Your application might be revoked if they found out that there is a transfer in ownership of your property within one year.
In order to apply for withdrawal to buy your second home, you will first need to sell off your previous property and provide a proof.
You are not allowed to withdraw money from your EPF account to renovate your house.
You are only allowed to withdraw money from your EPF account to buy land if you intend to build property on the land. Land purchasing alone is not allowed.
Purchasing a house overseas
You are not allowed to withdraw money to purchase houses overseas unless you plan to migrate and withdraw all money from your EPF accounts.
Although withdrawing money from your EPF account comes with some disadvantages and restriction, do note that you are withdrawing the money you’re your EPF account mainly for one purpose, which is to make buying your first own home possible in Malaysia.
it's great to hv this kind of service.. to utilize epf to buy house.. house nowadays is os expensive..BalasPadam
tahu juga pasal ni , gunakan simpanan kwsp untuk buat pembelian rumah dan bayar ansuran rumah , nanti nak share artikel ni dengan suami dan kawan2 yg lainBalasPadam
bagus tips yang dikongsikan, pada mereka yang hendak membeli rumah memang kena buat survey tips-tips dan kaedah yang betul. Moga perkongsian ini dapat membantu.BalasPadam
Baru tahu boleh beli rumah guna duit epf. Sebelum ni tak tahu pun. Kalau tahu, saya tak keluarkan epf biarkan dalam akaun. Nank beli rhmah guna duit kwps je kan. Anyway thanks for the informationBalasPadam
Harga rumah melambung tinggi..dapat keluarkan sedikit dari simpanan kwsp sikit sebanyak dah membantu.BalasPadam
Haven't thinking of buying home yet. I think i need to wait until i really reach financial stable then only i could think about a house. But EPF really helps as for the deposit. Thanks for sharing Mai ;)BalasPadam
Dengan harga rumah sangat tinggi sama di Bandar dan Pinggir Bandar sama sahaja. Btw terima ksih kerana memberi ilmu yang sangat berguna . Selamat hari Raya yaBalasPadam
Thanks for the tips and heads up. This will surely come in handy for housebuyers especially first time buyer. Now they will know how to use EPF to buy a house.BalasPadam
All the requirements and regulations to know before submit application to apply EPF to purchase a house. Good info to share with all. Thank you.BalasPadam