Since 1 January 2008, EPF a.k.a. KWSP members are also allowed to withdraw their money from EPF Account II to pay for their monthly instalments of a housing loan, which has been taken up for the purpose of buying or building a house.
Unlike the withdrawal of EPF money to reduce housing loan which the money is directly made payable to the bank, this withdrawal for housing loan monthly installment can be banked in to your personal savings account and its usage is just up to you, if your housing loan does not have the non-performing (NPL) status. Otherwise, the money will still go to the bank as if the withdrawal to reduce housing loan. In anyway, you should not let your housing loan to fall into NPL status, because the interest rate will be high, and the bank might put your house on auction to recover the defaulted loan.
I would advise you to opt for the withdrawal of EPF money to reduce housing loan instead of this one if you intend to use the money for your housing loan. This is because that method will directly reduce your loan principal in a lump sum and can save you interest as well as reduce the loan tenure period, but this method might not do the same for you and you might end up saving nothing.
I would advise you to use this monthly withdrawal of EPF money for purposes like the following:
- to settle out your outstanding credit card debts. This is because the interest rate is high, and soon you will lost your credit card interest free period if your debt is not settled.
- for purchase down payment or settle the loan of your car. This is because the car loan interest is calculated differently, and is generally higher than your housing loan. I have already written an article about this.
- for house renovation, wedding, birth of child, etc. This is because the interest rate for personal loan is generally higher than your housing loan.
- for investment in 2nd house, business turnover, or investments that you believe the return is much higher than EPF dividend.
This withdrawal is eligible to:
- A Malaysian citizen
- A permanent resident in Malaysia
- An expatriate who joint as member of EPF before 1 August 1998
The withdrawal process is pretty much the same as the withdrawal to reduce housing loan. You just need to complete the Form KWSP 9P (AHL) and submit it together with the required supporting documents to the nearest EPF office. You must go to the EPF office by yourself because your thumbprint is required to verify your application.
The required supporting documents are:
- Your MyKad
- Your bank savings account book or statement
- Photocopy of both side of your MyKad, printed on the same page of A4 size paper
- Photocopy of the pages containing your bank account details (including your full name, IC number, bank account number, branch of bank, etc.) of your bank savings account book or latest bank statement
- Letter from the bank confirming your housing loan details and the latest outstanding balance. You have to apply for this letter from your bank.