In recent years, government made a move to allow house owners to withdraw funds from EPF accounts not only as downpayments for a house, but also to pay the monthly installments on housing loans.
I have read some opinions that the latter’s scheme is not as attractive as it was made to sound. The process to withdraw the funds is easy enough, you need to provide EPF with your loan amount and the monthly installments you are paying. After the necessary processes and approvals, you will receive the funds on a monthly basis in your bank account, in the amount of your monthly installments. You will then expect that your account balance in your EPF will be reduced month by month by that installment amount.
Apparently, that is not the case at all. If your loan amount is RM100,000, this total amount is taken off your EPF account at the very start once your withdrawal has been approved. This has a big negative impact when it comes to the time of dividend payout. The dividends paid to you is calculated on your account balance and the RM100,000 that is taken out is not due for any dividends.
If it’s true that this is what is happening, then the question is where did the RM100,000 go to and why should it be deducted upfront?
{ 4 comments… read them below or add one }
I thought that would not be necessary. I mean, you can withdraw any specific amount from account 2 monthly without reference to the total loan amount. Eg. if you have RM500 coming into account 2 every month, you need not withdraw RM500 monthly under this scheme. You can opt for RM100 instead.
It doesn’t seem to be such a flexible scheme after all. It was probably a quick decision to launch this offering but it didn’t go through thorough thinking process of how best it can be implemented. Just my opinion anyway.
Maybe there is a “buffer” in between where the money must go to, just like everything related to government.
That goes without saying…