Hi All,

I am planning to withdraw money from my kwsp acc 2 to pay for my studies which does not quality for education withdrawal, therefore i plan to do it another way by applying to withdraw the acc 2 through the option to reduce/redeem house loan.

If i am correct once approved the amount will be credited directly into my existing house loan account am i right? If yes will the bank consider it as an advance payment or prepayment? I have read that if advance payment since i am having a semi-flexi account i can redraw but if prepayment i will not be able to redraw.

Anyone have similar experience before?

Appreciate your comment. Thanks

No, the amount will be credited directly to your personal bank account.

for house loan redraw.. u need a recent SNP

u have that?

then it will be a huge relief

i have the original snp signed back in 2014
just only applied through the kwsp portal, already submitted, no additional documents required, only fill in the blanks like when the loan approved, loan amount, date snp signed, etc

The amount goes to your personal account if do the monthly 1

If I remember correctly, the SNP cannot be more than 3 years in order to qualify.

i applied for a lump sum, reduce/redeem housing loan, not the monthly installment payment

really? i didnt see it mentioned anywhere in the webpage
anyway ive submitted, let's see how

Only says this

"Full payment in Ringgit Malaysia (RM) will be credited to your account
If you hold an active account with our panel bank and your identification no. matches the bank records"


https://www.kwsp.gov.my/en/member/withdrawa...artial/buy-home

Got write in the website

"Proof of Purchase
Sales and Purchase Agreement (not more than 3 years from the date of application)"

https://www.kwsp.gov.my/en/member/withdrawa...artial/buy-home

For lump sum withdrawal, it will be paid straight to your bank loan account. You can’t take it out tho as its not allowed by EPF.

But you can stop paying monthly mortgage for months equivalent to full sum withdrawn earlier.

not buy home but reduce-redeem housing loan

https://www.kwsp.gov.my/member/withdrawals/...em-housing-loan

this

ok that make sense but will epf really instruct bank to now allow withdrawal from loan account? i thought once released to bank their role is done, it is up to the applicant to keep it there reducing interest or withdraw..

I think this is for a lump sum and it says here directly to the house loan account

"All withdrawal payments will be credited directly into yours or your spouse’s housing loan account when you meet the following criteria.

You/spouse has a housing loan account with a panel bank appointed by the EPF; AND
Your/spouse’s loan with the EPF panel bank is not in the non-performing loan (NPL) status
Your/spouse’s loan account is still active
Your/spouse’s identification number as a borrower matches with the bank’s record
Payment is made in Ringgit Malaysia (RM)"

https://www.kwsp.gov.my/member/withdrawals/...em-housing-loan

Only the monthly is into your personal account. I think that is why I went with the monthly 1 long time ago.

This post has been edited by blurjoey: Apr 23 2021, 05:59 PM

Don't do that. It's not worth it if EPF finds out.

i just did balance reduction via kwsp last month.
its considered as prepayment which balance got reduced, not advanced payment, which mean you still need to pay your installment like usual

TS, trying to game EPF system by cheating.

The amount when taken from acc2 cannot be withdrawn as cash. It'll go straight to reducing the loan balance. I can confirm as I just did this.

Nice info!

There is advance payment withdrawal T&C that mentioned this EPF restriction prior to u clicking the “Submit application” thru web based system (M2U etc).

More likely that bank is going to reject the application if it finds out that u are going to withdraw the amount from EPF fund credited earlier.

The T&C varies by bank so worth checking with ur banker first.

The epf 2 reducing housing loan is considered as capital repayment, not advance payment. It means to say you can't withdraw it from semi flexi loan account. I just did it recently and find out couldn't withdraw the money out.

This post has been edited by coldfission: Apr 24 2021, 05:33 PM

The e-pengeluaran is very efficient, I got my withdrawal within 7 working days starting from the file I applied it.

My house was purchased in 2012 andd still able to use epf account 2 to reduce loan.

I believe this is the case, TS will not be able to cash out the advance payment.

Just did the withdrawal ie redeem last week n recd money deposit direct to loan acct not savings. Mine is cimb full flexi. Redeem cannot touch the money if tat is ur intention.

However wuthdrawal as monthly payment goes to savings acct, i also did tat last year. N u can use tis excess cash in ur savings

This post has been edited by cyjh: Apr 23 2021, 10:35 PM

This is correct

We were hoping so too. But reality isn't. Not worth using 6% interest capital to reduce a 3% loan. I learned my lesson.

This is correct

More than 3 years from date of signing, expired liao, cannot be used for EPF house loan withdrawal as lump sum.

This post has been edited by ceo684: Apr 23 2021, 11:24 PM

if that's the case then i will write in to kwsp and ask them to cancel the reduce/redeem house loan, then apply the housing loan monthly installment

EPF will directly credit it into your housing loan account to reduce loan amount
There is no such thing as into your own personal account

If the current dividend given by EPF is higher than your housing loan interest, just keep it inside EPF

You need to calculate the housing loan as compounding interest and EPF is yearly dividend interest

Whatever you withdraw from EPF will be compounded over the years too. So it still isn't worth it.

How about full flexi loan account, also not possible to withdraw the excess right?

The interest for EPF saving is 6%, while your housing loan interest is 4.+% right? Is it worth to do so?

it is still not possible to withdraw it as it is not treated as advanced payment.

You don't know EPF is compound interest?

The idea is to max the usage of EPF funds.
Because 1) you can "cash out" through not needing to pay your housing installments 2) time value of money 3) so that you do not get stuck once epf eventually raise min withdrawal age

You mean even full flexi also cannot take the money out? Aiks

Like how not worth it, care to explain? My math phailed

Example my epf only has 500k, but my housing loan got 1.2m included interest to pay. In this case is it better to withdraw epf 100k+ to reduce the loan principle amount? I see most people here only talking about interest rate comparison without comparing the principle amount

Interest rate savings and money savings are two different comparison.

Eg....

5% fd rate on 100k and 3% on 500k will have different quantum of interest money received.

100k will received 5k

500k will received 15k

This post has been edited by mini orchard: Apr 27 2022, 09:03 AM

I see. so it is to liquidate the money in epf. But i think will need to consider retirement time too. After retirement, we will need to spend more on healthcare and elderly care.

If we retrieve the money for house loan repayment now, we will have lower savings in EPF and lose out the compounding interest from EPF.

If you transfer RM100k to reduce home loan principle, your epf account loses 6% of the 100k amount, while your home loan saves on 3 or 4% (depends on the interest) of the 100k you paid off.
Is it worth it?

Your home loan still has RM1.1 principle that incurs interest at 3, 4%.

I still not fully get it, you mean the 1.1m @4% interest still cheaper than 500k @ 6%? Is this how people calculate? I thought reducing the housing loan principle can significantly reduce the total interest I have to pay. Unless my epf has more money than my house loan which need to service.

Let me put it this way.

If you kena Toto RM200k, do you earn more interest putting it in savings account (iinm 0.5% pa), or you pay your home loan (3% interest) to reduce RM200k principle? Your home loan now kena 3% x RM1m instead of 3% x RM1.2m pa.

(Home loan is daily rest, but I used pa for ease of explanation}.

Doesn't matter you have 1m, 10m or 100m loan principle, the 100k you withdrawn from epf only reduce 100k principle amount. It doesn't affect interest on the rest of the principle amount.

This post has been edited by poweredbydiscuz: Apr 27 2022, 10:23 AM

But the interest is calculated based on the reduced principle amount right right?

Alright I use the property guru website loan calculator, my understanding is correct. Reducing the principle housing loan amount is definitely worth it if your loan tenure is very long, and also your loan amount bigger than your EPF amount. Some of the comment I read here is misleading a little

This post has been edited by johnnycp: Apr 27 2022, 10:29 AM

Bank ....

01.01.22 ... RM1,200,000 @ 3% = 3,000

01.02.22 .... RM1,200,000 - 100,000 @ 3% = 2,750

Reduce of 100k = 250 interest savings



Epf ....

01.01.22 ... RM100,000 @ 6% = 500

02.02 22 .... RM0 @ 6% = 0

This post has been edited by mini orchard: Apr 27 2022, 10:35 AM

Wow you are not joking when you said your math is failed.

1m loan principle minus 100k from epf = 900k (you save 100k x loan interest)
10m loan principle minus 100k from epf = 9.9m (you save 100k x loan interest)
100m loan principle minus 100k from epf = 99.9m (you save 100k x loan interest)

You will save 100k x loan interest only, no matter how big is your loan principle.

EPF has compounding interest too. money retrieved from EPF to pay house loan can help to reduce the principle + house loan interest, but at the same time it will cause u earn lesser interest from CPF too, as your savings in CPF is lower after retrieval. It is like right pocket to left pocket, the only difference is how much interest to save/earn.

Yes, the money will be credited to your personal bank account every month if you opt for monthly reducing balance, nne lump sum withdrawal will go to your loan account.

For monthly reducing balance, you just need to apply via EPF website, EPF will contact your bank for the necessity.

Generally, EPF return is higher than your mortgage interest but you are doing it for a reason, for every decision you made, there is a opportunity cost.

EPF return - mortgage interest is about 2%, if you opt for withdrawal then the cost for such decision is 2%. what are the cost if you decide not to withdraw from EPF, since you need extra money, money comes at a cost.

Not to mention, unquantifiable cost like stress of managing cash flow. if you know what are the cost of not using your EPF money, you should be able to made up your mind.

Obviously these savvy people have planned to use that EPF money to generate more returns.

For e.g. my father withdrew his epf and placed it in usd denominated etf funds. Over the long run it should yield more than epf PLUS its in USD so you don't suffer the depreciating ringgit, at least over the long run.

Many who used epf money to buy a property prior to 2009 would have seen their property prices doubled.

Yea, i can understand if those retrieve the money and invest to generate higher yield. But i am just curious why would people retrieve the money to repay house loan, which are charging lower interest than the interest given by EPF

Its the same thing.

For e.g. say your original monthly installment on your housing is rm2k p.m.

After partial payment of your housing loan with epf and refinancing to another bank, your monthly installment reduced to rm1k.

Now you have "extra" rm1k to invest in an etf which would otherwise be used to pay your housing loan anyway.

That is one way to withdraw epf money for other purpose once the property is sold later.

Is also to reduce current debt level to be eligible for next loan purpose.

Not all epf withdrawal is only about interest rate.

Thanks for sharing. It is a good idea to liquidate the money in epf n potentially earn higher interest.

But One should mindful on the opportunity cost if they do so too. It is crucial to be able to manage the additional rm1k per month to overcome the opportunity cost.

Currently, if the property is sold, will the money withdrew from epf needs to be refunded to the EPF?

Yea, agree. the reduction debt level is one of the main benefits for Savvy investors.

Not required.

that will be a risk for some in retirement planning. Not everyone is financially literate enough to make good use of the money they withdraw from the EPF to earn more money. Common people like me might spend it or invest, but eventually make a loss in the investment. Then, it will be a burden to the individuals and the country if these group of people is large enough.

question regarding EPF e-pengeluaran to reduce/redeem loan amount

some people said the money will be used as advanced payment, which means let say I applied for 1 year worth of instalments, once it is approved, i no need to pay installments for 1 year?

while some say it will be treated as prepayment, which means upon the credit of EPF money into the loan account, i still need to pay installment as per normal? (which sort of defeat the purpose of withdrawing EPF money in the first place)

if you want cash, choose Housing Loan Monthly Installment withdrawal

Got 2 types. You can apply for monthly withdrawal to pay the loan or lumpsum withdrawal to reduce the principal balance. The latter still need to pay monthly installment.

the latter one can I decide the sum to withdraw? let say I don't want to withdraw 100% of whatever it is in Account 2

the monthly withdrawal one minimum is 12 months? after that can cancel?

there is a different type e-pengeluaran if you want EPF to pay your monthly installment - "Housing Loan Monthly Installment" in withdrawal type. the amount you requested will be set aside and will be deducted monthly to credit to your own Savings account to pay for the loan or direct to the loan account.If you choose this, your EPF Account can still earn dividends for the balance until you used up the amount.

For redeem/reduce, IINM, it depends on what type of home loan you are using. Can't remember the details.

another question is from the terms n conditions

it stated is only eligible for 1st house or 2nd house provided if 1st house already sold/disposed

the first house according to EPF definition is it the "first home that member applied to EPF for the withdrawal scheme" or "first home that member ever has" ? which one EPF follows?

because they are situation like I inherited a prop from parents, but the prop is already debt free, would EPF count that as first property, thereby rendering my applicaiton as void?

This post has been edited by dattebayo: Jun 7 2023, 11:10 AM

-yes you can set the amount.

-minimum is RM100/month for 6 months minimum

You can set the amount but the max is total loan or 100% acc 2, whichever is lower.

https://www.kwsp.gov.my/member/withdrawals/...hly-installment

Minimum should be 6 months and yes can cancel.

https://www.kwsp.gov.my/member/withdrawals/...em-housing-loan

This post has been edited by poweredbydiscuz: Jun 7 2023, 11:15 AM

first and second here means first and second house that you use EPF account for withdrawal scheme. The loan need to be under your name/spouse name.

"If member has not made a withdrawal to buy or build a house, member may make a withdrawal for any house."

so now that clears my doubt

inherited prop / debt free prop that never went thru EPF withdrawal are NOT counted as first house in EPF definition

Yes

Got a further question to this too. For either lump sum withdrawal or monthly withdrawal. If you have withdrawed before for house A for example. Then if I have another house B, I cannot withdraw for that unless house A is sold?

Lim sum goes into yr bnk loan. Monthly goes to u

Thanks, yes I got that from the previous answers, but that's not really what I'm asking.

to answer your question you cannot withdraw for house B unless you remove house A under ur name

Oh…. That’s interesting.

What about if the first house no longer has any outstanding mortgage on it?

why the option for withdraw for housing greyout?

I see, thanks for confirming.

new website greyout, i recently apply using old website, is ok no problem

i believe the statement meant you can only have 1 Mortgage Loan under EPF's home withdrawal scheme. You want to enroll another Mortgage Loan, then you need to remove previous one 1st. EPF do not concurrently deducting Acc 2 to pay 2 Mortgage Loans

Thank you. That makes sense