Employees of the Central Government who want to build their own homes can apply for the House Building Advance (HBA). The HBA will be available from the 1st of October 2020 to the 31st of March 2022, for 18 months, at a simple interest rate of 7.9 percent. The government had already changed the House Building Advance (HBA) guidelines for Central Government Employees, adopting the 7th Pay Commission’s accepted recommendations.
Back in September 2020, the FM announced a reduction in the interest rate for House Building Advance (HBA), providing relief and directly affecting the country’s Central Government personnel. House Developing Advance (HBA) interest rates will be linked to the 10-year G-Sec yield on the amount of advance taken for building a home in the future.
According to the 7th Pay Commission’s recommendations and the HBA 2017 rules, a central government employee can borrow up to 34 months of basic pay, subject to a maximum of Rs. 25 lakhs, or the cost of the house, or the amount based on repaying capacity, whichever is the least for new construction/purchase of a new house/flat.
The HBA amount for house expansion is capped at Rs.10 lakh or 34 months of basic income or cost of house expansion or an amount based on repaying capacity, whichever is less.
The existing pattern of HBA recovery will be followed, with principal recovered first in the first fifteen years in 180 monthly installments and interest recovered in the next five years in 60 monthly installments. The advance bears simple interest from the date of installment payment.
House Building Advance can be used to repay a bank loan taken out to build or purchase a new house or flat. Permanent employees and all temporary employees with 5 years of continuous service are eligible for HBA.
Employees are eligible for House Building Advance on the date they get loans from banks and other financial institutions, regardless of whether they applied for House Building Advance before raising the loan.
House Building Advances for loan repayment will be offered to eligible employees in one single sum. The Government employee, on the other hand, must produce the HBA Utilization Certificate within one month of the HBA’s release date.
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