Taking out epf money to buy a home 2
Logo3 small

Affordability Issues for New Home Owners

It’s no secret that housing in Malaysia is becoming increasingly unaffordable. And while incentive programs to help new buyers exist, there are often many restrictions and limitations placed on the buying process. This includes specifying property types, price limits, location, buyers’ age and income levels, in addition to balloting for affordable homes.

Thus, for people who don’t qualify for incentive programs and still can’t afford to make a down payment, withdrawing from their EPF account to fund the purchase might be one of the only ways to buy.

The Benefits of Withdrawing From Your EPF Account to Purchase a House

Apart from the obvious interest-free access to cash, here are more benefits to withdrawing to purchase a house:

Minimize monthly instalments

You can withdraw to make your repayments more affordable and release some of your current financial burdens.

Redeem loan balance to save on interest

If your housing loan’s interest rates are on the high side, you can pay it off to save on the additional interest costs and channel your funds toward better causes.

Help spouse clear off home loan

You can help your spouse pay down or settle his or her home loan and improve cash flow for the family.

Potential Drawbacks of Withdrawing From Your EPF Account

Dipping into your retirement reserves

These savings are meant to support your golden years and as is, your EPF savings alone has been deemed insufficient to maintain a similar lifestyle post-retirement. So unless you have other reserves and retirement savings, consider carefully before withdrawing.

Missing out on dividend earnings

By withdrawing a big chunk, you will be letting go of compounded dividend earnings. The dividend rate declared by the EPF in the past ten years average 5% to 6%. Before making a withdrawal, you’ll need to evaluate (based on your financing terms) if the interest savings and predicted property growth matches up with dividend losses in the long run.

Only available to withdraw from Account 2

Account 1 holds 70% of your contributions, thus you’ll only be able to access a smaller pool of funds. If the amount in your Account 2 is not substantial, you may still need to top up financing for your home purchase from elsewhere.

Are You Eligible to Apply?

You are eligible if you are:

- A Malaysian citizen
- Permanent Resident or non-Malaysian (who was a member of the EPF prior to the 1st of August 1998)
- Under the age of 55 years with at least RM500 in EPF Account 2

Additional terms of withdrawal include making the property purchase for residential purposes, intending to buy with cash or a home loan and having signed the Sale and Purchase Agreement not more than 3 years ago.

How Much Can You Withdraw?

This depends on the specifics of your purchase. There are four options available and each carry a maximum withdrawal limit:

1. Purchasing a Home with a 100% Home Loan

The maximum you may withdraw under a ‘zero-down’ home loan is 10% of the home price (to help pay for entry costs and other fees).

2. Buying a Home as an Individual

You may withdraw the difference between the price of the home and the loan amount plus 10% of the home purchase price, or all the money in Account 2, whichever is lower (and not less than RM500).

3. Buying A Home With An Immediate Family Member or Spouse

Again, the maximum withdrawal is limited to the difference between the price of the home and the loan amount plus 10% of the home purchase price, or all the money in both you and your relative’s (or spouse’s) Account 2, whichever is lower (and not less than RM500).

4. Buying With Cash Only (No Loan)

The withdrawal limit is the price of the home plus 10%, or all the money in Account 2, whichever is lower (and not less than RM500).

When Making An Application, What Documents Will You Need?

The documentation requirements for your application to withdraw and purchase a home are fairly straightforward but will differ with the specifics of your withdrawal.

The basics you’ll need include filling out the withdrawal form (KWSP 9C (AHL) (D5), which can be done online or downloaded and filled manually, a copy of your Identification Card and bank statement, as well as the Sale and Purchase agreement for the property in question.

You’ll also need to furnish them with proof of ties to your immediate relatives for joint applications (if your name is not on the loan), obtain a Certificate of Fitness for the property (new developments) and present a Deed of Assignment for a property that is still without a title.

The EPF may ask for further support documents such as the property blueprints, and in addition, do note that the EPF may reject your application if it is incomplete. More information regarding documentation requirements can be found here.

Notable Restrictions on EPF Withdrawals for Home Purchase

Even though the program is helpful for homeowners and new buyers, here are a few restrictions and limitations to consider before applying:

Withdrawals for ‘investment homes’

You are allowed to withdraw and make your home purchase but not for the sake of investments. The EPF has a right to revoke your application if they find out that a transfer of ownership is taking place within less than one year.

Withdrawals for second homes

You can withdraw a second time to make a purchase but you’ll need to provide proof that the previous property has been sold off first.

Renovating your property

If you are thinking of extending your home or making improvements to it, you’ll have to do so with other cash as you will not be allowed to withdraw for these purposes.

Withdrawing to buy land or housing lots only

You aren’t allowed to withdraw for land purchase alone; you may buy land but with the intention to build property on it simultaneously.

Buying A Home Outside of Malaysia

You can’t withdraw to buy overseas properties. However, if you are planning to migrate, you may withdraw all the money in your EPF accounts.

Buying a Third House

You may buy a second house, but only after you have sold off the first one. But that will be the extent of your withdrawal options for a home purchase.


From the restrictions, we can see that the EPF’s withdrawal options serve a very specific purpose. It is solely about making homeownership possible and more affordable. Thus, if these are the reasons for which you are buying a home, then withdrawing from your EPF account may just be the right move.

Looking for a new property? Check out PropSocial’s selection of hot upcoming properties you shouldn’t miss!

(Written by: Desiree Nair, 28 April 2017)


Chinese ad 4621 326x150 01

Img 20160429 wa0156 copycrop small

If you think your withdrawal amount from Account 2 now is still insufficient, try look up an alternative option to FD by investing in Unit Trust, Shares (go for dividend stocks), and in the mid term say 5 years, you will be able to get into the property market with the possible profits generated from these cash investments PLUS your would-have-increased Account 2 balance by then. 

Img 5409 small

for existing housing loan borrower, first time epf withdraw for house, just need to get the EPF withdraw loan letter from respective bank and bring the original letter to EPF office to withdraw, no need fill in form. my own experience. 

Img thing small

I guess this is more for younger adults who just started working and don't have much money for downpayment. Otherwise, I would say keep your money in EPF is not entirely a bad idea especially when the interest rate its about 5 - 6% which is better than FD. Moreover, it's for retirement :)

As for EPF account 1, I think you are only allowed to use 30% of the total to invest in unit trust. 

Signature 28 logo  custom  small


Agree with you to leave the money in Account 2 as it means less for your retirement. Ultimately, the choice is yours as there are other considerations. Another option is to use the money inside Account 2 for further studies. An MBA perhaps? 

Kate chew small

Some people use their EPF to invest simply because they do not have the cash to do so and also certain investment such as the CIMB CWA unit trust gives them about 12 - 15% return instead of just 6%. 

Signature 28 logo  custom  small


Need to bear in mind. High returns comes with Higher Risk... we can't run away from this... unless it is a scam. :^P

Img 5409 small

EPF account 1 money cant be fully withdraw. no harm to diversify in different type of investment

Signature 28 logo  custom  small


Account 1 as i know is for our retirement... cannot anyhow withdraw for other purposes... as for investment purposes, there is a formula we need to strictly follow...

Source: http://www.kwsp.gov.my/portal/en/web/kwsp/member-investment-withdrawal-eligibility

Img thing small

Yup, it is 30% withdrawal. But if at anytime you decided to stop that particular investment (for example unit trust), then it goes back into your EPF account.

Signature 28 logo  custom  small


I remember there was a time where we were able to withdraw money from our EPF account to buy Personal Computers... Too many EPF members abuse this withdrawal and hence it was discontinued.

Profilepic small


Profilepic small

If we buy the house with my family member, so its mean theg only will choose me or my family member kwsp acct to deduct? I mean, can we both apply to take out the 2nd acct for buying 1 house?

Img 6323 small

@veronica_yyk no, either one only.

Logo 427043 jiy   copy small

Hahaha That is goods

Img 5409 small

withdraw fully from epf acc 2 for my first home also.

Signature 28 logo  custom  small

Apart from using EPF funds to finance your home. Many of my friends also chose to withdraw from Account 2 to further their studies. 

Img 6323 small

@domng yes exactly. you can withdraw from epf acc 2 for quite some reason.

65648440 2406793556070448 9165628430648082432 o small

@admin_ps thank you for sharing