The Art of Balancing Mortgage and Funding Education with EPF
Many Malaysians face two major financial milestones, one is paying off their home loan and another is paying off their children’s education. Parents juggle between these important milestones and therefore, the more knowledge they have the easier for them to do strategic planning towards their financial planning.
If both parents are working adults, it is time to look at some of the options that EPF can provide, firstly to fund your first home and also for your child’s education. Planning needs understanding of your family needs and a balance of short term with long term security.
Do you know that the EPF Account 2 can be used for both housing and education withdrawals? EPF Account 2 is rather flexible for funding your education, whether it's your own, spouse or your children’s studies. It can be made once per/year for studies at local or overseas institutions for full or part-time degree/diploma or equivalent programmes.
How does one balance out education and mortgage commitments? Starting by mapping out your timelines. Determine when and at what age university starts and would require the fund. Compare it with your remaining loan tenure. Secondly calculate your affordability, make a close estimation of the total tuition cost and do a projection of your EPF balance growth over the duration. Then, consider partial withdrawals, combine your EPF funds with some other options provided by the Malaysian government such as SSPN also known as PTPTN Education Loan Scheme, Unit Trust and others. With this you will have an indication of withdrawal from EPF 2 that you can balance out for withdrawals.
If you already have the intention to withdraw partially for education, it is advisable to maintain a minimum EPF buffer for housing related needs. Always revisit and reassess your property loan obligations annually.
In conclusion, EPF can future-proof both education and property goals if used strategically. What is required is for early planning, calculate annually on your commitments and understand your needs. Use it as a means and valuable tool for managing both education and housing needs. However, withdrawals must be planned carefully to avoid jeopardising your property goals. Balancing these priorities will help secure your family’s future—both in education and home ownership.
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