written by | May 13, 2022

Understanding EPF Loan - A Comprehensive Guide

Simple access to financing for housing allows potential buyers to purchase an item that the person needs. Financing can allow you to organise all the cash yourself. However, home purchases require significant expenditure by the buyer since banks require home loan borrowers must pay a minimum of 20% of the purchase price in advance. In addition, one must spend around 10% of costs to complete legal requirements for property registration, like following the payment of stamp duty, etc. 

For those looking to buy a home of their own, withdrawing through an Employees Provident Fund (EPF) account is the easiest option that is simple to make.

Did You know?

According to the current guidelines, if you're a member of EPFO, the employer must pay an amount equal to 12% of the base salary of an employee to the P.F. account. 

What Exactly is an EPF Loan?

The employer and employee both make payments to EPF to help employees retire. The aim is to offer employees an amount in a lump sum at retirement. The EPFO has permitted employees to withdraw a portion of their salary from their P.F. accounts. The money is used to make personal loans to cover emergency expenses. The EPFO rigorously checks the authenticity of the application or not before permitting to take the loan through an EPF account. Are you wondering about how you can signup for a loan utilising an EPF account? Do you want to know the complete process? Check the next section.

How Can You Obtain a Loan Using Your EPF Account?

In essence, this isn't an advance loan. It's a loan that is only available in specific circumstances. You can avail of this earlier no matter if you still work (in an employment relationship with your employer currently). 

The cash amount you are eligible for to get the "advance payment" will depend on the particular situation required to fund and the length of time you have been employed. It is necessary to fill out Form 31, also known as an advance form of EPF, via your employer's contact with the EPFO and the necessary documents.

If you seek an advance for your wedding, you must send an invitation to marry in the form. On the EPF Form 31, you'll need to provide the P.F. Account number and the salary amount and bank account information. The claim will then be completed, and funds are directly debited into your account at the bank. Also, there are a lot of other small government loan schemes available with the least interest rates.

Also Read: Everything you Need to Know about the Calculation of PF Interest Rate

EPF Preliminary Rules for EPF

There are certain sets of rules imposed by EPFO to ensure no early withdrawals from the provident fund. These EPF Advance rules can be handy to prevent consistent withdrawals by employees from the P.F. accounts they have instead of saving the funds to be used for retirement. Below are these EPF Advance regulations:

  • Fund withdrawal for loan repayment in specific circumstances: The instructions and the guidelines to advance to fulfil this purpose was described in Para 68BB of the EPF Scheme in 1952. An applicant must complete 10 years of uninterrupted service. They must present a certification from an agency showing the outstanding interest of the principal and with form 31 for withdrawal of funds.

Advances are Granted in Specific Situations

  • In case of a lockout, closing of the establishment for over 15-day time, or if an employee is laid off with no compensation or hasn't received payment for over two months, the worker can make money without completing any time limit.
  • In case an establishment closes for over 6 months, and employees are employed without payment, the employee may take a withdrawal of all or a portion of the Employer Share with interest.
  • The fund can be accessed for medical emergencies in certain situations. It may include a loan to treat self or to treat relatives. An employee can take 6 months' basic wage and DA.

What is the Best Time to Avail of an EPF Loan?

You can get an advance against EPF depending on the service years. You must complete the EFP advanced form or Form 31 by the employer to the EPFO and all the necessary documents.

On the EPF Form 31, you'll need to provide the EPF account's number and your bank account and salary information. The claim is completed, and funds are debited directly to the account of your banking institution.

Check out the scenarios where you could take out a P.F. credit or credit against the P.F.


Taking a loan from EPF is possible for the cost you have to pay for the marriage of self, son, daughter, brother, or sister. The maximum amount that you can receive is 50% of the amount of (employee) pay, plus the interest rate when the submitting time of your application comes.

In total, there are only three withdrawals over your entire lifetime. The membership period should be seven years. You may be required to present the wedding invitation card.


If we talk about an education loan from EPF, you can opt for it for your sister, brother, yourself, son or daughter. Your maximum loan amount can be 50% of the amount of (employee) share plus the interest time of submitting your application.

The highest withdrawals are three throughout your existence. The membership period you choose to join is 7 years. You may need to provide an official study certificate and an estimation of course costs.

A Home Purchase or Piece of Land

You may be able to take out an advance against EPF to purchase a home or land plot. The amount you are eligible for is the equivalent of 36 months' salary plus an allowance of dearness. 

It can also be the sum amount of the (employee) part and the employer's contribution towards EPF with an interest rate or the cost total of purchasing the plot or home, which is less.

You can make one withdrawal per entire lifetime. The membership period has to be five years. You must take loans as EPF only as an option. This is the cash you need to retire.

Lockout of the Company

If your business is shut out or hasn't paid you wages for a minimum of two months or has been closed for 15 days, you may take out a loan from EPF. The loan amount in this situation is equal to the amount of the wages you haven't paid. If your company has been shut out for longer than six months, you can use the contribution from your employer.

Also Read: PF Calculator

Renovation of the House

Your maximum payout is 12 times the amount you earn. The property you are seeking to purchase must be at least five years old and belong to you, or your spouse must own it as a partner with you.


Natural disasters can cause enormous losses. In these instances, you can withdraw funds from the reserve fund. Also, there's no obligation to be able to withdraw from the fund within a certain period of service. You must provide proof of damages from the authority responsible. The maximum amount of loan you can get is 50% of your employee share. 


You must be saving your PF/EPF funds to fund an eventual rainy day shortly. In addition, EPF interest rates at 8.5% are normally more than bank interest rates.

But, sometimes, it makes more sense financially to pay off the mortgage. It's beneficial to be able to prepay your home loan earlier during the period when the interest rate is extremely high. 

In the later part of the tenure, At that point, it's more beneficial to continue to pay the EMI. If you take PF/EPF out for mortgage repayment, put the EMI each month through judicial methods to protect your future. 

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Q: How much is the P.F. loan interest rate?


It is 8.55% P.A.

Q: What is the P.F. loan process?


The person must submit Form 31 (the advance form) with other necessary documents to start the "EPF loan apply online" process. one can complete the loan availing process at the EPFO portal. Employees must have their UAN login to use the portal. It's possible to log in only after completing the UAN activation process.

Q: What is EPF loan eligibility?


A 5-year service period is necessary. The property needs to be in the EPFO member's name or the name of his/her spouse. They can also jointly own them.

Q: How long should my service life be to avail of the P.F. loan according to the P.F. loan rules?


Five years of service life is compulsory for you to be eligible to withdraw from your EPF account.

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