Utilize your Provident Fund to Finance a House.

By Abhay Harish Shah , Realty Quarter

PF commonly known as Provident Fund is a part of your salary, which is deducted every month and is deposited on your behalf. If you work in a private firm then the company pays the same amount as it is deducted from your account and when you leave the firm you can apply and withdraw the amount saved. This amount will come handy when you are out of job or retire.

Most of the people, don’t know how to utilize the PF money to finance a house, but there are many PF connected schemes to purchase a house. Of course, there are certain restrictions and limitations in doing so, which will be explained in detail in this article.

Who can use PF to Finance their House?

1) Served for 5 years: Any Employee who has served for more than 5years and has got 5 years of Provident Fund Account can withdraw the money to purchase a plot or apartment in an under-construction building or a house.

2) Withdrawable by the owner or by spouse: The amount to purchase a plot or a flat can only be withdrawn by the owner itself or by its wife or jointly both.

3) Amount Restricted for Plots: The amount you can withdraw is limited to the purchase you do. For example, to purchase a plot a person is restricted to withdraw 24 month’s basic salary and dearness allowance (DA) which cannot exceed the cost of the plot.

4) Amount Restricted for Flats: The total amount you can withdraw to construct a house or to purchase a house is 36 months of your basic salary and DA, with the maximum amount again restricted to cost of the house.

5) Rules for Under-construction: If you are withdrawing the Provident Fund for under construction project then the construction should start within 6month of withdrawal and should end within 12months of the last installment of withdrawal.

The provident fund scheme enables you to benefit from the withdrawal facility, for reimbursement of the exceptional balance of a home loan taken by you or your spouse, for any of the above purposes.

The sum can’t surpass three years’ fundamental pay and DA. This withdrawal must be made for reimbursement of the home credit taken either by the individuals and additionally by the mate, from indicated substances like governments and state governments, registered cooperative societies, state housing board, nationalized banks, public financial institutions, municipal corporations, or any development authority, to buy of a house. This facility can be taken after you have finished no less than 10 years of commitment to the EPF account.