You can easily take a loan from your Public Provident Fund (PPF) account whenever needed. In lieu of this, you do not have to mortgage anything and interest will also have to be paid only at the rate of 1%. Apart from this, repaying the loan is also easy. You can take loan from 3rd to 6th financial year of account opening. Think of it as if you had opened the account in 2020-21, then the loan can be taken till 2022-23. It will be a short term loan for 36 months.
How much loan can I get
You can take a loan up to 25% of the amount deposited in the PPF account. In such a situation, if you have more deposits in your account, then you will be entitled to take more loan. You get this loan at an interest rate of 1%. However, if you do not repay your loan amount within the stipulated time, you will have to repay the money at an interest rate of 6%. You can get a loan only once in a year. You will be able to apply for the loan for the second time only after you have deposited the entire amount.
How to repay the loan
You must first return the principal. You can do this in monthly installments. Apart from this, you can deposit the interest in two installments or in one go. At the same time, if you do not deposit the interest after depositing the principal amount, then that amount will be deducted from your PPF account.
Don’t have to wait ten years
If the account holder dies within five years of opening the PPF account, then the nominee will not have to wait for another ten years to get the money. Nominee has to submit Form G. After this, the amount will be deposited in the account of the nominee after successful verification by the respective offices.
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