Using EPF savings to pay housing loan arrears

20/02/2008 New Straits Times

KUALA LUMPUR: Beginning next month, Employees Provident Fund members whose housing loan accounts are in the non-performing loan (NPL) status can make withdrawals but it will be paid directly to the lenders.

Initially, the housing loan monthly instalment withdrawal scheme, which was introduced on Jan 1, did not allow members with NPL to make withdrawals from their monthly contributions.

However, in response to requests from members to be accorded the same flexibility with regards to NPL accounts as in the earlier scheme, the EPF has allowed this beginning next month.

Those whose housing loan accounts are in the NPL status can make withdrawals but it will be paid to the lenders.

Once all the arrears have been settled, the monthly withdrawals will be made directly into the members personal accounts.

Under the EPF's scheme to settle or reduce housing loan balances, members are allowed to withdraw their contribution, even if their housing loan accounts are in arrears.

This scheme was introduced in 1994 and made more flexible in 1996 when members were allowed to withdraw their savings every year instead of once in three years. Payments are made to the lender.