Withdraw EPF Money for Home Loan Installment: How it affects your Retirement Fund


EPF was started for the sole purpose of forcing employees to set aside a certain percentage of their income for their retirement. It was generally perceived that if the contributions were to be used for other purposes, this would have a detrimental impact on the size of the retirement nest egg.

However, using these contributions to finance outstanding housing loans is also another form of long term saving as the property is likely to appreciate after the mortgage is settled. This article discusses how you can utilize your EPF money for your home loan installment and the subsequent impact such a move may have on your retirement fund.

How it Works?

This type of withdrawal involves you withdrawing money from your Account 2 to finance your monthly installments for your housing loan, which was taken up either to buy a new house or build a new one.

Contributors need to go to the EPF to apply for the monthly withdrawal only once, and subsequent payments would be directly credited to their personal accounts every month.

You are eligible to apply if you are:

  • A Malaysian Citizen


  • A Malaysian Citizen who has made Leaving-Country Withdrawal (a full withdrawal) before 1 August 1995 and has opted to re-contribute.


  • A Non-Malaysian Citizen (Expatriate) who has become an EPF member before 1 August 1998.


  • A Non-Malaysian Citizen who has obtained a Permanent Resident (PR) status.
  • You have not reached age 55 at the time the EPF receives your application. The maximum age allowed for application of this withdrawal is 54 years and 6 months.
  • You still have a balance in Account 2 of at least RM600.00.
  • You do not have arrears for your housing loan.

Documents required

  • For the first withdrawal, you are required to submit all of the following:
  • KWSP Form 9P (AHL)
  • A photocopy of myKad/IC
  • A photocopy of the bank book for your active account
  • Bank Confirmation Letter/ Housing Loan Statement
  • Deed of Agreement of Sale and Purchase/Build House
  • All loan approval letters
  • All redemption letters from previous financier(s)
  • Proof of Mortgage/Transfer of Ownership (Mortgage Form & Ownership documentations or Binding Transfer of Ownership Letter

For subsequent withdrawals, the following need to be submitted:

  • A completed monthly withdrawal form
  • A photocopy of myKad/IC
  • A photocopy of the bank book for your active account
  • Latest housing loan statement

If your loan comes from a bank with an online housing loan verification with EPF, the following need to be submitted:

  • A completed monthly withdrawal form
  • A photocopy of myKad/IC
  • A photocopy the bank book for your active account
  • Latest housing loan statement

If you have opted for the refinancing facility, you will have to produce all the required documents similar to first withdrawal.

Example: Individual withdrawal

Example: Individual withdrawal

House Price

RM 200,000.00

Housing Loan with Bank ‘A’

RM 180,000.00

Latest Outstanding Loan Amount with Bank ‘A’

RM 150,000.00

Monthly Repayment Amount To Bank

RM     1,300.00

Savings In Your Account 2

RM 120,000.00

Maximum Amount You May Withdraw

RM 80,000.00

Accummulated Monthly Repayment Amount

(Minimum 6 Months)

RM     7,800.00

Monthly Payment Amount From EPF

(Minimum RM100.00 and maximum RM1,300.00)

RM     1,300.00

For joint withdrawals, the amount eligible for withdrawal is the total outstanding balance of the loan or the balance amount in Account II for both applications.

Conditions when EPF will revoke the monthly installment withdrawal and render members to be unable to be eligible to apply for a similar withdrawal in the future:

  • Members have a non-performing loan with a financial institution.
  • Loans have been revoked/redeemed.
  • The house has been sold/auctioned/transferred to another party.
  • Members who are convicted of cheating by submitting fraudulent documents/information for this withdrawal

How Does Withdrawing EPF Affect Your Retirement Fund?

If contributors withdraw their EPF for housing purposes, they will in turn have fewer funds for their retirement. However, at least they can be sure that they have roof to live under. For now, property is affordable in Malaysia, but one never knows what will happen to the property market in the future. Looking at Korea and Taiwan, it is almost impossible to own a home at big city if you are not rich.

The move to allow withdrawal of EPF to finance housing loans is a new one, which would benefit about five million active EPF contributors. Contributors who previously found it monetarily tight to buy a property can now consider doing so with this new withdrawal scheme.

This way, some contributors would be able to own better houses and yet be able to lessen their monthly financial obligations.

Photo by jjze

Contributors who are currently homeowners and are paying mortgage can also experience better cash flow as less money is spent out of hand for the loan.

This new withdrawal scheme is also good for those who know how to manage money. They can use this facility to grow their wealth. For instance, consumer debt in the form of credit card loans, personal loans can be paid off; they can invest for better return or even fund higher education.

However, for those who are financially illiterate, more money equals more trouble. They will spend for instant gratification without thinking of future needs. This may cause a social problem in the future when retiree has inadequate funds to live on.

5 Suggestions to channel EPF back to your retirement fund

Since you are reading this blog, I bet that you are amongst those who want to take advantage of this withdrawal facility and grow your retirement further. Here are 5 suggestions to channel your EPF money back to your retirement fund:

1. Buy unit trust fund that will outperform EPF (5% currently) – by applying ringgit cost averaging strategy
2. invest in shares – buy blue chip, aim for high dividend payout
3. buy another property – to receive rental income after retirement
4. buy an annuity plan – to receive yearly income during retirement
5. Pay towards the principle of your housing loan, thus shorten the loan tenure and save on interest charge.

About The Author


personal finance author and trainer


  • InvestorBlogger

    Reply Reply February 8, 2008

    It would be a good idea to explain what an EPF is… for international visitors. I don’t know what it means. Does it mean Earnings for Pension Funds?


    • KCLau

      Reply Reply February 12, 2008

      EPF stands for Employee Provident Fund, something like 401(k) in the US.

  • Cath

    Reply Reply February 15, 2008

    Hi, I know its not related to what you have but can you tell me how to apply for my EPF payout? I have been in New Zealand for nearly 30 years and will be visitng Msia in a couple months time for two weeks. Moreover I lost my IC card but can remember the numbers.

  • fisol bakar

    Reply Reply June 10, 2008


    I have enough fund in my EPF Acct 2 to settle my house loan outstanding amount. Currently the loan fixed rate I am servicing is 8% PA. Would you reckon I to “settle” the loan now (remaining 25 years) from the Acct 2 and then arrange a new financing for 2nd house?

    • KCLau

      Reply Reply June 11, 2008

      @ Fisol Bakar
      It is advisable to settle your existing loan (8% interest) with EPF money (only 4-6% recently).

  • Melinda Phang

    Reply Reply July 6, 2011

    Question on whether contributors can withdraw to settled their credit cards debts
    not clearly answered. Can or cannot. I got no housing loan.

    • KCLau

      Reply Reply July 7, 2011

      No. You can’t withdraw money from EPF to pay credit card debt.

  • Lee

    Reply Reply July 20, 2011

    Hi KC
    Assuming that I can afford to pay high down payment for another house, is it better to take higher mortgage, i.e. lower down payment or low mortgage, i.e. high down payment for 2nd EPF withdrawal to make financial sense?
    Appreciate your advice. Thank you.

  • Patakar

    Reply Reply October 28, 2011

    Hi there,

    Is it possible to take money from Acct 2 Second time and have it in my personal acct rather than pay the bank directly?

  • serene

    Reply Reply December 23, 2011

    if ‘i’m a bankruptcy after 55 years old can withdraw the EPF money ??

  • Eva

    Reply Reply June 16, 2012

    For a recent retired person, is it better to keep funds in the EPF to earn higher dividend or buy a house to rent out. The current rental will fetch about 4% to 6%. The property is somewhere near Utar in Kampar.

    Thank you.

  • jack anthony

    Reply Reply August 22, 2012

    hi i have a doubt bout buying hous wit my EPF money.
    ok i am 21 this year but i plan to buy it 3 years time. how do i apply the loan or get the loan.
    and which account i would get to take out for the loan? please advice me.

    • Paul

      Reply Reply October 17, 2012

      Hi Jack,

      You can take out your epf acc 2 for housing purchase irregardless of your age. It is good to buy property at a younger age as it is a long term investment which is always likely appreciating in value. Just check out the EPF website for more info.


  • chestionare auto

    Reply Reply December 8, 2014

    Withdraw EPF Money for Home Loan Installment: How it affects your Retirement Fund Completeaza chestionare auto drpciv 2014 categoria
    B, C, E, A, D si treci examenul auto cu aceste teste drpciv online- chestionare auto
    Chestionare auto si teste explicate pentru categoria
    B. Chestionarele de la examenul auto oficial sunt actualizate si revizuite.

    Ia examenul auto din prima.

  • Sanaa

    Reply Reply August 10, 2016

    Hi there,
    Is it worth to withdrawal epf money to pay housing loan? Current epf interest is 6-7% while my housing loan interest is less than 5%. If it is worth, I would like to pay my principal amount

    • KCLau

      Reply Reply August 11, 2016

      There are two types of withdrawal
      – Type 1: The fund in Account 2 is withdrawn and paid to bank directly to reduce the principle amount
      – Type 2: The fund is being paid to you in the amount of the installment, each month.

      For type 1, you will be earning less with your EPF money because apparently 6-7% is better than 4.5% mortgage interest
      For type 2, you have control over the money. If you are a good investor, you can get higher return than 6-7%.

      • Xander

        Reply Reply February 21, 2017

        Hi KC

        HSE loan267K. Account 2 total 167K. Can I choose to clear my account 2? If I do would my monthly instalment reduce. Who decides wheter epf would opt for monthly payment? Bank? EPF? Or me? Thanks man

        • KCLau

          Reply Reply February 26, 2017

          You have two choices. Go to EPF office and they will ask you which option you want:
          Option 1: Issue RM167k to pay off the principle loan of your mortgage. The cheque will be issued to the bank bracket your account if not mistaken.
          Option 2: To withdraw to pay off monthly installment of the mortgage. Then you will receive the fund every month in your bank account.

  • Melanie

    Reply Reply August 24, 2016

    Dear KC,
    Does it have to be a home loan per se or can also be flexi term loan for a commercial property?

    Also, can I only withdraw for x no. of months or does it have to be until loan is fully settled?


    • KCLau

      Reply Reply August 26, 2016

      Hi Melanie, the best is to ask EPF directly for the most accurate answer.
      As far as I know, it has to be a residential property loan. There is a minimum I think 6 months worth of installment in your Account 2 before you can initiate the withdrawal.

  • meena

    Reply Reply November 11, 2016

    Hie I would like to no wether can I settle my aeon credit personal loan amount about RM 5000k by withdraw from my kwsp 2nd account ..tq

    • KCLau

      Reply Reply November 12, 2016

      I am not sure if you can do that. But you should check with EPF to confirm.

  • noy mineman

    Reply Reply November 19, 2016

    Thought-provoking commentary ! I learned a lot from the info – Does anyone know where my company would be able to find a sample MUIH Individual Course(s) Withdrawal Request Form document to use ?

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