One application for monthly EPF disbursement for housing loan
Posted on | September 13, 2007
By THE EDGE
KUALA LUMPUR: Homeowners will only have to apply once to have 30% of their monthly Employees Provident Fund (EPF) contributions credited into their personal banking accounts towards paying their housing loan instalments, said Second Finance Minister Tan Sri Nor Mohamed Yakcop.
“It’s a simple mechanism, and there isn’t a downside to it at all. You just apply once, then every month, the money will be credited from your second EPF account to your personal (current or savings) accounts,” he said.
Speaking on the sidelines of the Malaysian Newspaper Publishers’ Association Forum 2007 here yesterday, Nor Mohamed said homeowners would have to pay for their housing loan instalments anyway, and the additional measure would greatly ease their cash flow.
Asked if homeowners may abuse the process, he said in the event of defaults in the payment of the housing loans, control mechanisms would be put into place to stop the EPF disbursement to the contributor. The EPF will have to verify the existence of the housing loans with the respective banks.
“70% of your money will still be in your account one and you still can’t touch until you’re 55. So what can be a better use of EPF contribution in the long term, than to pay for a house, which is something that is very good for your old age, as it appreciates,” Nor Mohamed said.
He said given the freeing up of the EPF contributors’ cash flow, the additional spending power would encourage consumption, and help to boost growth in the economy.
Nor Mohamed added that the move presented a long-term benefit to all the five million EPF contributors.
In Budget 2008 tabled last Friday, Prime Minister Datuk Seri Abdullah Badawi said as of Jan 1 next year, the government would allow EPF contributors to finance home purchases from their EPF Account II. He said this would free up RM9.6 billion annually from the EPF.
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