A news piece quite recently made people smile. It was about the government easing restrictions of PF withdrawal in case someone wanted to buy a house. In essence, you can withdraw PF money to buy your own house. Isn’t that great? After all, it is your money and you can finally use it to at least buy your own house. However, have you ever given this a good thought? If you have, then this piece is not for you. If you haven’t keep reading to know why you may need to reconsider your decision of PF withdrawal for home buying.
Reasons To Rethink PF Withdrawal
Reason 1: Retirement money
The first reason why you need to reconsider your PF withdrawal is because this money is for your retirement. When you are unable to work with as much vigour as you are able to today, this money will come in handy. However, if you withdraw this money today, you will be doing away with your own ‘umbrella for rainy days’. Simply put, just because you need to buy a house, you do not need to withdraw PF money. What you can instead do is go for a loan, try to increase your income sources or invest in FD and other savings/investment plans.
Reason 2: Potential loss
Do you know that money stored in a PF account has one of the highest returns you can get? The interest rate on PF account money is quite good. So, when you choose to withdraw it for buying a home, you are doing away with the best money multiplier you have. The problem is that unlike PPF accounts, in PF account, money accumulates slowly. So, you will not be able to rebuild your PF account to the same level as it is, if you withdraw its money. All the more reason to walk away from PF withdrawal.
Reason 3: Co-Pay Loan
See, if you are withdrawing money from your PF account, you will try to go for as little home loan as possible. Why? You will wish to pay less EMIs towards the loan. Simple as that. However, instead of withdrawing PF money, do consider the option of a co-pay loan. If your spouse is also working, you both can go for a co-pay loan where you can get to save more tax and share the EMI burden. Will that not be much better than PF withdrawal?
Do consider these reasons before withdrawing your PF money. After all, more than anything else, this money gets accumulated slowly over time. This means the PF withdrawal decision of yours will be irreversible. You will not have an option to reset everything that you do in this case. All we are saying is that withdrawing PF money needs to be your absolute last resort. Unless that it is the case, PF withdrawal is a trap that looks quite alluring but has immediate and collateral damage to be dealt with.