How to Fund Your Property Buying Through Your Provident Fund
Jul 25, 2018 Real Estate News
Salaried individuals have a provident fund account, but not many are aware that one can use the PF money to buy or renovate their property. Under the provident fund scheme, an employee can withdraw the money from the PF account after completing five years of employment. The loan can be taken for the construction and purchase of a property. If you and your spouse own a piece of land, the loan can also be provided for the construction of the house.
For purchasing the plot, the loan is given based on the basic salary of last 24 months and dearness allowance, subject to the maximum of the lower of either the balance in your account or the cost of plot.
If you want to purchase or construct a house, then the availability is enhanced to 36 months of basic salary and dearness allowance, with the maximum subjected again to the lower of either the balance in your account or the cost of the house.
It is pertinent to know that the property cannot be purchased with anyone else apart from your spouse, for withdrawing from the provident fund.
Another critical thing to note about withdrawing money from the provident fund is that, if one intends to purchase the ready property, the purchase must be completed within six months. If the person wants to construct a house, then the construction shall be completed in 12 months. The withdrawals for the purchase or construction can be made in more than one instalment, depending on the circumstance.
For purchasing the plot, the loan is given based on the basic salary of last 24 months and dearness allowance, subject to the maximum of the lower of either the balance in your account or the cost of plot.
If you want to purchase or construct a house, then the availability is enhanced to 36 months of basic salary and dearness allowance, with the maximum subjected again to the lower of either the balance in your account or the cost of the house.
It is pertinent to know that the property cannot be purchased with anyone else apart from your spouse, for withdrawing from the provident fund.
Another critical thing to note about withdrawing money from the provident fund is that, if one intends to purchase the ready property, the purchase must be completed within six months. If the person wants to construct a house, then the construction shall be completed in 12 months. The withdrawals for the purchase or construction can be made in more than one instalment, depending on the circumstance.
For the renovation of the house owned by self
The scheme allows withdrawing the money to carry out the changes and improvement in the house, given that the house has completed five years after completion. It is not necessary for you to renovate the same house for which you have taken the loan. The amount withdrawn is restricted to 12 months of basic salary and dearness allowance, subject to the lower of the balance relatable to the employee’s share with interest in your account or the cost of renovation. One can avail the same withdrawal, after ten years of taking the same loan.Repayment of housing loan
Provident fund allows one to withdraw the money for the repayment of the housing loan that one has taken. The advances cannot exceed 36 months of basic salary and dearness allowance. The withdrawal can only be made for the loans, availed either by the spouse, from specified entities like governments and state government, registered co-operative society, state housing board, nationalised bank, public national bank, municipal cooperation, or any development authority for the purchase of the house.Looking for property portal?
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