HBA for CG employees at affordable rate of interest
House Building Advance for Central Government employees at affordable rate of interest
A vital announcement on House Building Advance for Central Government employees: Recently the Finance Minister Nirmala Sitaraman said that the interest rate on House Building Advance will be lowered due to linked with the 10 Year G Sec Yields.
The current interest rate for House Building Advance is at 8.5%. And the recovery of principal first in the first 15 years and the interest will be deducted thereafter in the next 5 years with simple interest calculation method.
The 10 Year G Sec Yield is less than 7 percent as on September 2019. So, expected the rate of interest on HBA may be reduced below 7 percent on Housing Building Advance for Central Government Employees. This will help to build a new house who wish to initiate to construct their own house.
The Central Government revised the rules on loan eligibility, Cost ceiling, Advance, Repayment method and Rate of interest as per the recommendations of 7th Pay Commission in 2017.
The key highlights of the recommendations of 7th CPC on HBA as follows…
HBA can avail only one time in the entire service.
For House or Flat
34 months basic pay is the maximum amount of HBA and the ceiling of HBA is Rs.25 lakh. Cost of the house or flat or repaying capacity (whichever is the least)
Construction for expansion
34 months basic pay is the maximum amount of HBA and the ceiling of HBA is Rs.10 lakh. Cost of expansion or repaying capacity (whichever is the least)
40% of basic pay for retiring after 20 years
40% to 65% of basic pay for retiring after 10 years
Up to 50% of basic pay for retiring within 10 years
(DCR Gratuity may also be adjusted in the above two cases respectively 65% and 75%)
Methodology of Recovery
7th Pay Commission recommended on the interest rate on HBA
- The interest on Housing Building Advance shall be reviewed every three years
- The methodology of recovery of Housing Building Advance shall continue as per the existing pattern
- Recovery of principal first in the first fifteen years in not more than 180 monthly installments
- And the interest thereafter in the next five years in not more than 60 monthly installments.
- The advance carries simple interest from the date of payment of the first installment.
Latest Developments on 7th CPC HBA
- 7th CPC House Building Advance – Loan Migration – CGDA November 20, 2018
- 7th CPC House Building Advance Rules (HBA) – Partial Modification August 8, 2018
- 7th CPC HBA – Amendment to Rules on House Building Advance May 14, 2018
- Migration of Home Loan to Revised HBA – Ministry of Housing & Urban Affairs February 12, 2018
- HBA Interest Rebate as per the recommendations of 7th CPC February 12, 2018