The Government had earlier revised the House Building Advance (HBA) rules for Central Government Employees incorporating the accepted recommendations of the 7th Pay Commission.
The Central Government employees, who wish to construct their own home, can avail the House Building Advance (HBA). The HBA availed from 1st October 2020 to 31st March 2022 i.e., for 18 months will come at a simple interest rate of 7.9 per cent. The government had earlier revised the House Building Advance (HBA) rules for the Central Government Employees incorporating the accepted recommendations of the 7th Pay Commission.
Back in September 2020, the FM had announced lowering of the interest rate for House Building Advance (HBA), thus giving relief and directly impacting the Central Government employees in the country. Going forward, the interest rate of House Building Advance (HBA) will be linked to the 10-year G-Sec yield on the amount of advance taken for building a home.
As per the recommendations of the 7th Pay Commission and the HBA 2017 rules, the total amount of advance that a central government employee can borrow is up to 34 months of the basic pay subject to a maximum of Rs. 25 lakh, or the cost of the house, or the amount according to repaying capacity, whichever is the least for new construction/purchase of new house/flat.
The HBA amount for expansion of the house is capped at Rs.10 lakh or 34 months of basic pay or cost of the expansion of the house or amount according to repaying capacity, whichever is the least.
The methodology of recovery of HBA shall continue as per the existing pattern recovery of principal first in the first fifteen years in 180 monthly instalments and interest thereafter in the next five years in 60 monthly instalments. The advance carries simple interest from the date of payment of installment.
House Building Advance can be availed towards repayment of bank loan taken for the purpose of construction, purchase of new house or flat. HBA is admissible to permanent employees and all those temporary employees also who have 5 years of continuous service.
Employees shall be eligible for grant of House Building Advance on the date he or she has obtained loans from banks and other financial institutions, irrespective of whether they applied for House Building Advance before raising the loan.
House Building Advance for repayment of loans shall be granted to the eligible employees in one lump sum. However, the Government employee shall produce the HBA Utilization Certificate within one month from the date of release of HBA.