Month: September 2017

how can you make use of your provident fund to purchase an apartment

how can you make use of your provident fund to purchase an apartment

Majority of the working population has PF accounts but, were you ever aware of what wonders you can do with it? You can withdraw from this fund for purposes like buying your very own house!

Purchase a house or plot and construct it with your PF

Under the Provident Fund Scheme, you or, any employee is given the liberty to withdraw money from his PF account post completing 5 years, in order to purchase a plot/ for the construction of your house.

Don’t worry about whose name the property is in- be it you or, your spouse, it’s fine. The loan amount is based upon the purpose of taking the loan. In order to purchase a plot, your loan shall be restricted to only 24 months of your basic pay and DA or, Dearness Allowance, subject to a maximum of the lower of either the balance in your provident fund account or the cost of the plot.

In case you wish to avail of the loan in order to purchase an apartment, the availability shall be enhanced to 36 months of basic pay and DA with the maximum again subject to lower of balance in the provident fund account or cost of the house. However, if this is the path you choose to opt for the loan, you cannot purchase the property jointly other than with your spouse for withdrawing your PF.

Another criteria, if you’re planning on withdrawing your PF, ensure that your construction begins with 6 months and end by the end of 12 months of withdrawal. You can also withdraw your PF in installments as per the requirements.

If you’re buying an apartment which is ready to move in, the purchase needs to be completed within 6 months.

Ways to improve your house owned by your spouse/ you

You can also withdraw your provident fund amount if you wish to improve or add things onto your house which is owned by you and your spouse or, only you.

The withdrawal shall be availed only 5 years post completion of your house. It’s not a necessity that the house for which you’re withdrawing your PF for purchase has to be the one during improvement as well. In fact, you can withdraw to improve your house irrespective of how you paid for it! However, the amount eligible to withdraw is still restricted to 12 months of your basic salary and DA, subject to lower of the balance relatable to the employee’s share of interest in your account or the cost of such improvement.

Want to withdraw again? Wait for another 10 years past the 1st withdrawal to withdraw again!

Thinking to

Advances for repayment of your housing loan

  • The PF scheme allows you to withdraw your PF for repayment of the outstanding balance in a home loan taken by you or your husband/ wife for all the purposes mentioned above.
  • 36 months of basic pay is the maximum it can get with regard to withdrawal of your PF.
  • The loans can be availed by members of your family or, your spouse from specified entities like state government registered co-operative societies etc. for the purchase of your house.