Non-pension workers are entitled for EPF (Employee Provident Fund) account contribution as part of their retirement plan. Employee will contribute a certain percentage of their monthly salary (11%), while the employer’s contribution stands at 13% now (effective Jan 2012). For example, if an engineer earns RM4,000 per month, his total monthly EPF contribution is RM440+RM520 = RM960.
An EPF contributor’s account is divided into 2: Account 1 and Account 2. Account 1 is safeguarded for full/partial withdrawal upon retirement, while Account 2 is a more flexible fund which is accessible for certain withdrawals. Such withdrawals include down payment for housing loan, studies fee, settling housing installment and so on.
How to Withdraw Money from EPF to Buy a House.
This article explains how withdrawal of money from EPF can be made to pay the down payment for house purchase. By default, one EPF account (Account 2) can only acquire one house at a time. An EPF contributor can use this fund to buy a second house provided the first house has been sold or lost in ownership. Losing house to auction (lelong) or a house transferred to another person on compassionate ground (even the EPF withdrawal has been made for this first house) is considered “lost in ownership” and therefore you can still apply for another withdrawal.
Types of houses applicable for purchase through EPF include bungalow, terrace, semi-detached, condominium, apartment (service or studio), townhouse, SOHO (Small Office Home Office) or shop-lot premise (with accommodation, i.e., rumah kedai). Only in-country properties are considered, and buying only a piece of land or a house lot will similarly disqualify you. If your house acquisition is through hire-purchase, allowed institutions are banks, the federal government, your employer, Koperasi and licensed insurers. If your purchase funds come from another institution not listed above, check with the EPF office to verify the validity.
If your house purchase is through a loan, following are the documents that you need to make ready:
- The sale and purchase (S&P) document of the property. The agreement must not have exceeded 3 years by the time of application. Bring a copy (for EPF record) and the original document (to verify authenticity). Read on if you intend to send the application through mail.
- Photocopy of your identity card (IC), front and back.
- Bank statement. The active bank of which you intend to get the money transferred to. Only individual bank account is allowed; joint-account can only be used for withdrawal of more than RM100,000.
- Bank loan agreement. Both copy and original.
- If the property is co-acquired between married couple, a marriage certificate is needed.
- Land title (Geran tanah).
- Form KWSP 9C. The form is downloadable from EPF website. Since the link keeps changing, it is not shown here. Please make sure that you get the accurate form, as there a few other similar forms (vary slightly in name) but for different purposes. This is also a useful form where you get more details of withdrawal entitlement or purchases that don’t go through loans.
It is important to get those copied documentations certified, otherwise you will be stuck in pre-approval process. Get all the documents ready and pay a visit to the nearest EPF branch to indicate your intention: withdrawing EPF money to buy a house.
It is also allowable to send the application through mail/post. In this case, send only the verified copied documents and keep the original intact with you, just in case you are required to make authentication in the EPF office. Forms can be mailed to: KWSP, Karung Berkunci No. 220, Jalan Sultan, 46720 Petaling Jaya, Selangor. For inquiries, call 03-8922 6000 or submit your inquiry online.