Retirement savings: EPF solution to owning home
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 installment, the monies goes back to the member’s EPF account just like unit trust investment plan.
This article is refer from https://www.nst.com.my/
KUALA LUMPUR, Feb 22 — The revived Light Rail Transit 3 (LRT3) will be completed by February 2024.
This was announced after Prasarana Malaysia Berhad, MRCB George Kent Sdn Bhd and nine work package contractor (WPC) companies signed the novation agreement to resume work today.
Finance Minister Lim Guan Eng, who was on hand to witness the signing ceremony, said the project’s feasibility was finally approved after rationalisation to cut costs from RM31.65 billion to RM16.63 billion, or 47 per cent less.
“The savings of RM15.02 billion will allow a higher volume of users utilising the public transport as the price of tickets does not need to be too expensive.
“It is redundant if a new and shiny public transport system is built but no users are on it because of the high fare as a result of inflated construction costs,” he said.
He mentioned these during his address at the signing held at the Prasarana headquarters in Bangsar, accompanied by Transport Minister Anthony Loke Siew Fook, and Federal Territories Minister Mohd Khalid Abd Samad.
Also present was Prasarana president and group chairman Datuk Mohamed Hazlan Mohamed Hussain, who explained the restructuring and rationalisation process meant the risks surrounding inflated costs were transferred to the contractors.
He said by utilising a Fixed Price Contract with the WPC companies, the added costs over time will not raise the government’s final bill.
“The risk is transferred to the contractors from Prasarana until the completion of the project, rather than adding financial burden on to us,” he said when asked about contracted prices potentially inflating against foreign exchange fluctuations.
Lim and Mohamed Hazlan said the remainder payments due to the WPC companies would be paid out as soon as possible.
“We will subsidise the payments based on loans and bonds; its financial architecture will be under the MOF (Ministry of Finance),” said Lim.
The LRT3 project is set to connect the townships of Bandar Utama and Johan Setia in Klang, covering a distance of over 37.6 kilometres.
It is said to benefit around two million people living along the route, with 20 stations and 22 sets of three-car trains.
Refer from www.malaymail.com
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