BUYER’S GUIDE

EPF RESOURCES

A. WITHDRAWAL TO BUY BUILD HOUSE OR SHOP HOUSE

With effect from 1 November 1994, EPF BOARD introduced a new system whereby the contributions standing to the credit of and received in respect of each member shall be apportioned into three (3) accounts as follow:
AccountContributionsPurpose of Account
Account 160%For Retirement
Account 230%For Housing and Pre-retirement Plans
Account 310%For Medical Expenses

30% of the amount standing to the credit of the member is kept in Account 2 which may be withdrawn for housing purposes. It may also be withdrawn, upon the member reaching the age of 50, for retirement plans to be made.

HOUSING PURPOSES

For housing purposes, the withdrawals is to enable the member to:

buy/build a house or shop house with residential unit
reduce/settle balance of housing loan

A member is eligible to apply for withdrawal, if he:

is buying/building a house or shop house with residential unit;
has not made any previous withdrawal for housing purposes;
has entered into a sale and purchase agreement to buy/build a house within two years prior to the date of receipt of the application by EPF Board. For those who have entered into the sale and purchase agreement exceeding the two years period, they are eligible to make withdrawal under the
Withdrawal to reduce/settle balance of housing loan scheme;
has not attained the age of 55 at the time of application.

For individual/joint purchases, the members may make withdrawals from the Fund for an amount equivalent to:

the amount of difference between the cost price and the loan with an addition of 10% of the cost price; OR
the whole amount standing to the credit of the individual/joint members whichever is the lower.
For joint purchases, the EPF Board will process the application from the first purchaser and if the amount so withdrawn is insufficient to meet the total eligible amount required, then only the application from the second purchaser will be processed.

How to apply for withdrawal?

An application for withdrawal may be made by submitting form KWSP 9C (AHL) (obtainable free of charge from any EPF office), in duplicate, together with the following documents:

In respect of purchase from Developer:

Photostat copy of identity card, duly certified;
Sale and Purchase Agreement and copy thereof;
If housing loan is obtained, produce loan approval letter/loan agreement and copy thereof; AND letter of explanation from member (if the loan is less than 50% from the buying price);
If no loan is obtained, produce letter from developer requesting for progress payments together with the architect’s certificate AND receipt to show that at least 20% of the purchase price has been paid OR produce original title deed/deed of assignment duly transferred/executed in member/purchaser’s name and copy thereof, if available

In respect of purchase from private person/public auction:

Photostat copy of identity card, duly certified
Sale and purchase agreement in respect or purchase from private person OR proclamation/certificate of sale issued by the court in respect of auction conducted by the court
Letter of consent for transfer approval from the developer/Land Office
Title deed/Deed of Assignment in the name of vendor (if the property is not subject to any restriction of interest)

If a housing loan is obtained, produce:

Housing loan approval letter with a copy thereof;
Letter of explanation from member (if the loan is less than 50%)

If no housing loan is obtained, produce:

The Title Deed/Deed Assignment in the name of the member/purchaser, with a copy thereof, OR
Confirmation letter from the lawyer in-charge regarding cash purchases;
Receipt to show that 20% of the purchase price has been paid, with a copy thereof

In respect of building own house:

Photostat copy of identity card, duly certified;
The building contract or in the absence of a building contract, a statutory declaration with regard to the construction of the house
The Title Deed to the land registered in the name of the member or the spouse of the member with a cop thereof;
Completed building plan (if it is in the Local Council area)

If a housing loan is obtained, produce:

Housing loan approval letter/loan agreement, with a copy thereof;
Agreement letter for 1st progress payment together with the Architects Certificate

If no loan is obtained, produce:

A receipt to show that not less than 20% of the price of construction has been paid, with a copy thereof;
Letter requesting for stage by stage payment together with the Architect’s Certificate (if any)

Joint application

Joint application are required to submit documentary evidence of their relationship such as Marriage Certificate, Surat Nikah, Birth Certificate, Deed of Assignment or Title Deed at the time the application for withdrawal is made.
A Statutory Declaration from the first proprietor if the first proprietor has no intention to make application for withdrawal

B. WITHDRAWAL TO SETTLE/REDUCE HOUSING LOAN

A member may withdraw his EPF credit in Account II in order to reduce/settle any outstanding housing loan. Such withdrawal may be made once in every 3 years until the member attains the age of 55 years.

A member is eligible to withdraw:

The total amount standing to his credit Account II, or
The total outstanding balance of the housing loan, whichever is the lower
For joint purchases, the EPF Board will process the application from the first purchaser and if the amount so withdrawn is insufficient to meet the total eligible amount required, then only the application from the second purchaser will be processed.

How to apply for withdrawal?

An application for withdrawal may be made by submitting Form KWSP 9 (MP), in duplicate, together with the following documents:
Photostat copy of identity card, duly certified
Sale and Purchase Agreement/Contract to build house.
Letter of approval for housing loan (Subsidises)/Loan agreement (Subsidises);
Title Deed/Deed of Assignment
Statement of balance of Housing Loan issued by Lender showing particulars of the borrower, housing Loan a/c no., particulars of property and outstanding amount of loan due as at date of application (if such documents are in custody of the chargee, they should be certified by the chargee)

Joint Application

In case of joint application, the member is required to submit a statutory declaration from the first borrower, if he is also an EPF member, to the effect that he has no intention to withdraw his EPF credit.

C. EXAMPLES

Case 1: All the savings from Account 2 are eligible to be withdrawn.

En. Ahmad bought a house at RM75,000 and obtained a loan for RM60,000. He has an EPF savings of RM18,000 in Account 2. How much would he be eligible to withdraw?

Calculation:

Price of houseRM75,000
Minus Loan Amount obtainedRM60,000
Difference between the aboveRM15,000
Add 10% from Price of HouseRM 7,500
Amount eligible to withdrawRM15,000
Savings in Account 2RM 7,500
Because Encik Ahmad only has a savings of RM18,000 in his Account 2, which is lower than the eligible amount of RM22,500, Encik Ahmad is therefore only allowed to withdraw RM18,000.

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D. EASIER EPF WITHDRAWALS

Two amendments with regards to withdrawals from EPF for housing purposes are currently being put through Parliament and likely to be passed soon. As such, these amendments could be effective before the end of the year. They relate to the following:

One contributor can withdraw for joint-ownership properties.

The first amendment calls for allowing of contributors to withdraw EPF savings to pay for housing loans taken by their spouses if the couple is registered as joint-owners of the property.
Currently, contributors are not allowed to make EPF withdrawals to pay for housing loans if they do not make the withdrawals jointly. This could mean the difference between being able to or not purchase a house. The relaxation will allow these marginal cases to purchase houses and create better demand.

EPF withdrawals reduced to once every three years.

The second amendment is on the increase in frequency that contributors are allowed to withdraw funds from the EPF to settle their housing loans. The reduction will be from the present once every five years to once every three years.
By allowing withdrawals every three years, new contributors will be eligible to draw down funds from the EPF for the purchase of houses sooner than under the previous ruling.
For further questions on EPF, please refer to their website at : http://www.kwsp.gov.my