The government has reduced interest rate on House Building Advance (HBA) for them from 8.5 per cent to 7.9 per cent.
Here’s good news for Central Government Employees. In what may be termed as festival bonanza for Central Government Employees, the government has reduced interest rate on House Building Advance (HBA) for them from 8.5 per cent to 7.9 per cent. The new interest rate of HBA is applicable from October 1, 2019 for a period one year. In an Office Memorandum (OM) dated 01-10-2019, the Ministry of Housing and Urban Affairs said, “The interest rate on House Building Advance (HBA) for Central Government Employees will be 7.9% from October 1, 2019 for a period of one year.” This statement has replaced Para 7 (i) of the ministry’s OM dated 09-11-2017. The previous OM had set the HBA interest at 8.50 per cent.
“The interest on Housing Building Advance for the financial year 2017-18 onwards shall be 8.50 per cent. This shall be reviewed every three years to be notified in consultation with Ministry of Finance,” the previous OM said.
All other provisions for HBA mentioned in the previous OM will remain the same for central government employees.
Methodology: How HBA is recovered
The central government employee has to first repay the principal in the first 15 years in not more than 180 monthly instalments and interest thereafter in next five years in not more than 60 monthly instalments.
The HBA carries simple interest from the date of payment of the first instalment.
As per official rules, central government employee can get the house building advance for purchase of ready built house in one lump sum as soon as h/she executes an agreement in the prescribed form. “The employee should ensure that the house is purchased and mortgaged to the Government within three months of drawl of the advances,” rules say.
HBA can be availed by a central government employee for construction of a new house, purchasing a plot and constructing a house on it, expanding the living accommodation of an existing house etc.