EPF Chief Executive Officer Shahril Ridza Ridzuan gave the warning to those who intend to take up the scheme, open only to first-time house buyers and for the purchase of 1Malaysia People’s Housing (PR1MA) homes costing RM300,000 or below, TheSun reported today.
“We’re in the midst of finalising the scheme which will begin on Jan 1 next year.
“However, those who intend to go into this scheme must make sure they are aware that they are trading off long-term ability to draw down Account 2 for short-term ability to buy a house,” he was quoted as saying by the daily.
Shahril added this was because under the scheme, the four participating banks – Maybank, CIMB, RHB and AmBank – will approve the loan amount based on the future income that will be going into borrowers’ EPF Account 2.
Shahril said the move to “ring-fence” the borrowers’ EPF account was also to give more assurance to banks so that they will be able to give a higher loan limit to applicants.
Hence, those choosing the facility will not be able to make any other pre-retirement withdrawals under Account 2, including for medical, education, age 50 and Hajj withdrawals, until the PR1MA loan is fully settled.
He also suggested that the situation may be complicated if the borrower defaults on the housing loan.
“The bank has to foreclose on the house first. For Account 2, when we say ‘ring fence’, it’s not a charge on Account 2 to force the members to take out their money. (But) the member will definitely use the money to avoid bankruptcy,” TheSun quoted Shahril as saying.
He added that should a borrower default on a loan, the Account 2 money will be utilised eventually even though it cannot be used until the loan is settled.
Shahril also denied there was any plans to extend a similar end-financing scheme to Selangor’s affordable home scheme, called Rumah Selangorku.
“PR1MA is a nationwide housing scheme. So I think it is sufficient to cater to the market,” he told TheSun.