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10 November 2017
 |
| INR (The Total Investment & Insurance Solutions) |
Incorporating
the accepted recommendations of the 7th Pay Commission, the government on
Thursday raised the maximum amount that a central government employee can
borrow from the government to Rs 25 lakh for new construction/purchase of new house/flat.
Earlier this limit was only Rs 7.50 lakh.
The move is going to benefit about 50 lakh
central government employees across the country. The Total Investment & Insurance Solutions
Following are the salient features of the new
House Building Advance (HBA) rules:-
-The total amount of advance that a central
government employee can borrow from government has been revised upwards.
The employee can up to borrow 34 months of the basic pay subject to a maximum
of Rs 25 lakh, or cost of the house/flat, or the amount according to repaying
capacity, whichever is the least for new construction/purchase of new
house/flat. Earlier this limit was only Rs 7.50 lakh. The Total Investment & Insurance
Solutions
-Similarly, the HBA amount for expansion of
the house has been revised to a maximum of 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 least. This amount was earlier Rs.1.80 lakh. The Total Investment & Insurance
Solutions
-The cost ceiling limit of the house which an
employee can construct/ purchase has been revised to Rs 1.00 crore with a
proviso of upward revision of 25% in deserving cases. The earlier cost ceiling
limit was Rs 30 lakh.
-Both spouses, if they are central government
employees, are now eligible to take HBA either jointly, or separately.
Earlier only one spouse was eligible for House Building Advance. The Total Investment & Insurance
Solutions
-There is a provision for individuals
migrating from home loans taken from Financial Institutions/ Banks to HBA, if
they so desire.
-The provision for availing ‘second charge’
on the house for taking loans to fund balance amount from Banks/ Financial
Institutions has been simplified considerably. ‘No Objection Certificate’ will
be issued along with sanction order of HBA, on employee’s declaration.
-Henceforth, the rate of Interest on Housing
Building Advance shall be at only one rate of 8.50% at simple interest (in
place of the earlier four slabs of bearing interest rates ranging from 6%
to 9.50% for different slabs of HBA which ranged from Rs.50,000/- to
Rs.7,50,000/-) .
-This rate of interest shall be reviewed every
three years. All cases of subsequent tranches/ installments of HBA being
taken by the employee in different financial years shall be governed by the
applicable rate of interest in the year in which the HBA was sanctioned, in the
event of change in the rate of interest. HBA is admissible to an employee
only once in a life time.
-The clause of adding a higher rate of
interest at 2.5% (two point five percent) above the prescribed rate during
sanction of House Building Advance stands withdrawn. Earlier the employee was
sanctioned an advance at an interest rate of 2.5% above the scheduled
rates with the stipulation that if conditions attached to the sanction
including those relating to the recovery of amount are fulfilled
completely, to the satisfaction of the competent authority, a rebate of
interest to the extent of 2.5% was allowed. The Total Investment & Insurance Solutions
-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 next five
years in 60 monthly instalments.
-The house/flat constructed/purchased with
the help of House Building advance can be insured with the private insurance
companies which are approved by Insurance Regulatory Development Authority
(IRDA).
-This attractive package is expected to
incentivize the government employee to buy house/ flat by taking the revised
HBA along with other bank loans, if required. This will give a fillip to
the housing infrastructure sector.The
Total Investment & Insurance Solutions
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