A home of our own is every person’s dream. To provide a safe haven for their loved ones. It is also the safest investment that will appreciate in the future, while also securing a permanent roof over one’s head. About 70% of the Indian population belongs to the working class, employed by the government, or by private organizations. The government of India is always on the path to progress by making it easier for its citizens to afford housing. 

Whether you own a plot and wish to develop it, or buy houses for sale in Mogappair west, the Provident Fund can help you achieve your dream of owning property. You can use it to buy a house, build a house, or renovate a previously owned property. 

Understanding the Provident Fund

Anyone who has been employed will be given access to a Public Provident fund by their employer. Any business with more than 20 active employees needs to register them for the provident fund. The individual will be subscribed to the Employees Provident Fund Organisation (EPFO) run by the Indian Government. It is part of the Ministry of Labour and Employment. 

Employees subscribed to the PF are entitled to a loyalty benefit of Rs. 50,000. This sum can be drawn on their retirement, after 20 years of continuous service. The individual is also entitled to the loyalty benefit if, under unfortunate circumstances, they are rendered permanently disabled when engaged in work. In this case, the individual can claim it even if they have not completed 20 years of service.

Now that you know how the Provident Fund works, let us look further into how it helps us fund the purchase of a new home. 

The relationship between Provident Funds and Real Estate

The Government of India introduced the ‘Housing for All’ scheme on the 25th of June, 2015. It was named the Pradhan Mantri Awas Yojana and launched with the intention of providing affordable housing for all in the urban areas. As per the PF scheme, the employee can draw 90% of the total PF amount, after consistently contributing towards it for a period of 5 years. The scheme allows monthly installments towards the home loan, funded by the homebuyer’s provident fund. The funds will be directed to the Central Government if one buys a house developed by the government. If the individual chooses to buy from another real estate, the funds will be directed to them. 

This fund can be used whether you are buying a constructed house for sale in Mogappair West, or buying a plot to build a house on. One can also use it to renovate an existing structure. But the fund can be accessed only after contributing to it for a minimum period of 5 continuous years. The amount that can be taken out from the provident fund is equivalent to 3 years of the basic pay allocated by the employer. The Ministry of Finance has authorized an interest of 8.65% on the total deposit taken from the Provident fund. The government proposes to take this scheme to benefit over 4 crores of working-class Indians, enabling them to purchase a home with dignity. 

Using PF to fund the construction of a house

If you already own a plot and wish to construct upon it, you can avail the benefits from the Provident Fund. The homeowner is only eligible for this scheme if the construction commences within 6 months of the withdrawal of the fund. Another eligibility factor is that the construction must be completed within 12 months from the withdrawal of the fund. 

If you are buying a property that is under construction like a house for sale in Mogappair West, the structure must come under possession within 6 months of withdrawal of the fund. The scheme can be availed only by the person who is employed and by their spouse. The fund can be withdrawn as a lump sum amount, or in installments, that are directed towards stagewise payments as per real estate norms.

Using PF to pay back an outstanding Home Loan

Suppose you have already taken out a home loan, either in your name or in the name of a spouse. This outstanding home loan is eligible to be covered by the provident fund. A maximum amount equivalent to 3 years of the basic pay provided by the employer can be taken out of the Provident fund. However, this is only eligible if the home loan is taken from government-affiliated lenders and other registered state government housing boards. 

Using PF to fund the renovation of an existing property

As mentioned before, the provident fund can also be used to complete the renovation of an existing property. If you have a preowned property and wish to scale it up, then you can draw upon the PF. However, the amount eligible for this purpose is only equivalent to 1 year’s worth of basic pay as allocated by the employer. You are still eligible for the next withdrawal after a period of 10 years. The property in question must explicitly be owned by you, your spouse, or jointly owned by both.

Raunaq Foundations is one of the best builders in Chennai. We cater to the specific needs of urban dwellers, opting for maximum utility and comfort with uncompromised quality. Our plots for sale in Tambaram are a great choice for first-time homebuyers, with convenient access to all facilities. You can gain access to the provident fund to construct your dream home on the plot property. Our experts are just a call away, to guide you to make the investment of a lifetime. Call us at 98842 43333.


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