Don't Rush to Use EPF for Home Loan: The Hidden Cost Revealed

• EPF's 8.25% interest is tax-free, equivalent to 11% pre-tax for those in the 30% tax slab, making it a high-return asset.
• Home loan rates are around 7.5%, with declining interest components and potential tax deductions under the old regime.
• Using EPF for loan repayment sacrifices long-term, tax-free retirement capital, which is hard to rebuild later.
• Scenario: Rs 20 lakh EPF grows to Rs 44 lakh in 10 years, far exceeding the Rs 9 lakh home loan interest paid over the same period.
• EPF withdrawal for home loan repayment is only advisable near retirement, with an adequate corpus, significantly higher loan rates, or severe cash flow stress.

Why It Matters: EPF's tax-free compounding makes it a superior long-term retirement asset compared to early home loan repayment.