BANKS are not lending? Well, you have your Employees Provident Fund (EPF) savings to tap into!
The Middle 40 per cent(M40) or Bottom 40 per cent (B40) group have high savings, but in the form of the EPF fund.
An average of 24 per cent of their monthly income goes to the EPF (11 per cent from employee and 13 per cent from employer).
“The solution for all Malaysians to own a house before retirement free from encumbrances would be to use the EPF monies to pay for the monthly instalment so that they have extra real residual income.
“Basically, own and stay at your unit, with your EPF monies contributing to your monthly instalment,” said See Kok Loong, executive director of Metro Homes Realty Bhd.
See, who is also deputy president of Malaysia Institute of Professional Estate Agents and Consultants, said if the payment comes directly from the EPF monies, banks would be willing to finance the purchase, even for the B40 group, because the instalment is secured as long as they are employed.
The EPF allows members to withdraw their savings in Account 2 to finance the purchase of a house so they can own at least a home before their retirement.
The terms of withdrawal include members buying a residential house (bungalow/terrace/semi-detached/apartment/condominium/studio apartment/serviced apartment/townhouse/small-office-home-office) units, or a shop lot with a residential unit.
Withdrawals are not allowed for buying land/house lot; renovations/repairs; acquisition of property not done via sale and purchase transaction; member who has taken an overdraft loan; buying a third house; or buying a property overseas.
But some may argue that the EPF is a forced saving policy for retirement. Would it be risky to withdraw the fund to buy a property?
See said the government can set a policy where the withdrawal is applicable to first buy and instalment payment is up to 45 years old.
“If the young generation comes into the market when they are 20 years old and start owning a house at the age of 21 or 22 using their EPF monies for instalment, by the time they are 45, they would have a mortgage free home. They can do other things with the retirement saving at the age of 45 to 60 whereby their wages would also be much higher by then,” he said.
See believes that more people would be able to own a house if they are aware of the EPF withdrawal plan.
“Every Malaysian can in fact own a house before retirement together with our current mortgage system. It will be business as usual for banks and developers are able to sell their units because real demand is coming in.”
He added that if the property is sold before full instalment, the monies goes back to the member’s EPF account just like unit trust investment plan.