House Building Advance to Central Government Employees

Government Employees Can Get a House Building Advance

The House Building Advance Rules are a set of guidelines established for Central Government Employees who are looking to finance the construction, purchase, or renovation of a new home. These rules specify the eligibility criteria for the loan, the repayment terms, interest rates, and other related details. The rules are designed to offer financial assistance to government employees who are seeking to fulfill their dream of owning a home and ensuring that they have a comfortable living space to call their own.

Scheme of House Building Advance to Central Government Employees (Effective from 27th November, 2008)

The Scheme of House Building Advance to Central Government Employees is aimed at providing assistance to the Government employees to construct/acquire house/flats of their own. The scheme was introduced in 1956, as a welfare measure. Ministry of Urban Development & Poverty Alleviation act as the nodal Ministry for the same.

House Building Advance is admissible to all those temporary employees also who have rendered 10 years of continuous service. The Ministries / Departments are delegated powers to sanction House Building Advance to their employees in accordance with the House Building Advance Rules. With effect from 27-11-2008, the following provisions of grant of House Building Advance shall be in operation, until further orders:-

(i). The maximum limit for grant of HBA shall be 34 months’ of pay in the pay band subject to a maximum of Rs. 7.50 lakh or cost of the house or the repaying capacity whichever is the least, for new construction/purchase of new house/flat.

(ii). The maximum limit for grant of HBA for enlargement of existing house shall be 34 months’ pay in the pay band subject to a maximum of Rs. 1.80 lakh or cost of the enlargement or repaying capacity, whichever is the least.

(iii). The cost ceiling limit shall be 134 times the pay in the pay band subject to a minimum of Rs.7.50 lakh and a maximum of Rs.30 lakh relaxable up to a maximum of 25% of the revised maximum cost ceiling of Rs.30 lakh.

The rate of interest on House Building Advance is between 5% to 9.5% , depending on the loan amount.

The repaying capacity of Govt. servants who have more than 20 years of remaining service has been revised from 35% to 40% of pay. (Pay means pay in the pay band).

The salient features of House Building Advance Rules are as follows-

Eligibility of House Building Advance

• Permanent Government employees.
• Temporary Government employees who have rendered at least 10 years continuous service.
• To be granted once during the entire service.
• If both the husband and wife are Government of India employees and eligible for HBA, it shall be admissible to only one of them.

Purpose of House Building Advance

HBA is granted for:

• Constructing a new house on the plot owned by the official or the Official and the Official’s wife/husband jointly.
• Purchasing a plot and constructing a house thereon.
• Purchasing a plot under Co-operative Schemes and Constructing a house thereon or acquiring house through membership of Co-operative Group Housing Scheme.

Purchasing /construction of house under the Self-Financing scheme of Delhi, Bangalore, U.P., Lucknow etc.

Outright purchase of new ready-built house/flat Housing boards, Development Authorities and other statutory or semi-Government bodies and also from private parties.*

Enlarging living accommodation in an existing house owned by the official or jointly with his/her wife/husband. The total cost of the existing structure (excluding cost of land) and the proposed additions should not exceed the prescribed cost ceiling.

Repayment of loan or advance taken from a Government or HUDCO or Private source even if the construction has already Commenced, subject to certain conditions.

Constructing the residential portion only of the building on a Plot which is earmarked as a shop-cum-residential plot in a Residential colony.

* Private party means registered builders but not private individuals.

Conditions of House Building Advance

a) The applicant or spouse or minor child should not already own a house in the town/Urban agglomeration where the house is proposed to be constructed or acquired.

b) The title to the land should be clear. The land may be owned either:- by the Government employee; or – jointly by the Government employee and spouse.

Cost Ceiling of House Building Advance

134 times of pay in the pay band subject to a minimum of Rs. 7.50 lakh and a maximum of Rs.30 lakh

Administrative Ministry may relax the cost ceiling   to 25% of cost ceiling mentioned above in the individual cases on merits.

Amount of Advance for HBA

will be the LEAST of the following:-

1. 34 times the pay in the pay band.
2. The cost of construction.**
3. Rs. 7,50,000/- ***

Repaying Capacity of HBA

** 80% of cost in rural areas.

*** Rs. 1,80,000/- in case of enlargement of existing house.

Repaying Capacity is computed on the following basis:-

A=Length of remaining service of the applicant, B=Repaying Capacity

Note: Basic Pay means Pay in the pay band

Disbursement of Advance

Time Schedule for Utilisation

Repayment of Advance

The recovery of advance shall be made in not more than 180 monthly installment and interest shall be recovered thereafter in not more than 60 monthly installments. In case Government servant is retiring before 20 years, repayment may be made in convenient installments and balance may be paid out of Retirement Gratuity.

Interest of House Building Advance

The rate of interest on Housing Building Advance with effect from 1^st April, 2003 are as follows:-

A=S.No., B=Amount of Advance sanctioned to a Government Servant, C=Rate of Interest on HBA (Per Annum)

Commencement of Recovery

Commencement of Recovery (Continued)

* The sanctions of HBA should invariable stipulate a higher rate of interest at 2.5% above prescribed rates with the stipulation that if conditions attached to the sanction are fulfilled, rebate of interest to the extent of 2.5% will be allowed.

Creation of Second Mortgage

The Government servants who have obtained HBA from the Government may be permitted to create a second charge on the property provided they obtain prior permission of the Head of the Department and the draft deed of second mortgage is submitted to the Head of the Department for scrutiny. Such a second charge may be created only in respect of loans to be granted for meeting the balance cost of houses/flats by recognised financial institutions.

Provisions for safe recovery of HRA

(i). As a safeguard of the House Building advance, the loanee Government employee has to insure the house immediately on completion or purchase of the house, as the case may be, at his own cost with Life Insurance Corporation of India and its associated units.

The house/flat constructed/purchased with the help of House Building advance can also be insured with the private insurance companies which are approved by Insurance Regulatory Development Authority (IRDA). However, the insurance should be taken for a sum not less than the amount of advance against damage by fire, flood and lightning, and has to be continued till the advance together with interest is fully repaid to Government

(ii). The house constructed/purchased with the help of House Building Advance has also be mortgaged in favour of the President of India within a stipulated time unless an extension of time is granted by the concerned Head of the Department. After completion of the recovery of the advance together with interest thereon, the mortgage deed is re-conveyed in a proper manner.

Here we have given an example, how to calculate the interest amount for House Building Advance.

An employee has drawn House Building Advance as two installments of Rs.163750. His first installment given on October 98 and the second installment on July 99. He started to repay from November 99 with monthly Rs.1500. Here we calculate the interest amount for the employee has to pay…

Interest amount = 10248125 / 1200 X 10.5 = Rs.89671

7th CPC HBA  – House Building Advance (HBA) rules for Central Government Employees

What is House Building Advance (HBA) for Central Government Employees?

HBA is a special loan scheme that enables Central Government employees to purchase or construct a new house or renovate an existing one.

Who is eligible for HBA?

Permanent employees of the Central Government, including those working on a contract basis, are eligible for HBA.

What is the maximum loan amount that can be availed under HBA?

The maximum loan amount that can be availed under HBA is 34 months of the basic pay or the cost of the house or flat, whichever is lower.

What is the interest rate charged on HBA?

The interest rate charged on HBA varies from time to time but is generally low compared to other loans.

What is the repayment period for HBA?

The repayment period for HBA varies according to the loan amount and the employee’s pay scale. However, it can range from 10 to 25 years.

Can HBA be used to purchase a plot of land?

Yes, HBA can be used to purchase a plot of land provided it is for the purpose of constructing a house on it.

What documents are required to apply for HBA?

The list of documents required to apply for HBA may vary from one organization to another, but usually include salary slips, appointment letter, property papers, etc.

How can I apply for HBA?

Central Government employees can apply for HBA through their respective ministries or departments. The application process may vary depending on the organization.