Your EPF account 2 can be used for property purchase either via a lump sum withdrawal or via monthly withdrawal for payments towards your mortgage. However, in view of the recent good dividend payments by EPF and cheap loans available, it makes more sense to keep your EPF intact.

The dividend declared by EPF for 2007 was 5.8%. Compared that with housing loan interests which at the moment is as good as BLR - 2.2% (EON Bank Print Media advertisements). So the current BLR is 6.75% and minusing 2.2%, you get 4.55%. Then you take 5.8% and subtract that with 4.55% you get 1.25%. Doesn’t sound like much you say? Well, for a RM300K loan, you will save RM3,750 per annum or translated to a savings of more than RM300 per month. Now, isn’t that a lot? The money saved could be used to buy a new car even.

So a lot of people who do not do their homework, will withdraw from Account 2 and end up “losing” some savings.

I hope you find the above tip useful. I am thinking about revamping this blog where I offer to provide different financial scenarios as case study. So if you have any queries, feel free to leave me a comment, I will strive to answer them to my best of abilities.