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Interest rates on House Building Advance likely to be increased

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Last Updated: January 11, 2023, 14:43 IST

In accordance with the 7th Pay Commission's recommendations, the HBA facility is offered to employees of the Central Government.

In accordance with the 7th Pay Commission’s recommendations, the HBA facility is offered to employees of the Central Government.

Central Government employees are eligible for interest-bearing advances for a variety of things.

Central Government employees are eligible for low-interest House Building Advances (HBA). HBA is now subject to an interest rate of 7.1%. Through an office memo dated April 1, 2022, the Ministry of Housing & Urban Affairs lowered the rate of interest on HBA to 7.1% till March 31 , 2023. However, from the new financial year the Centre is likely to increase the interest rates on HBA.

In accordance with the 7th Pay Commission’s recommendations, the HBA facility is offered to employees of the Central Government. According to HBA regulations, Central Government employees are eligible for interest-bearing advances for a variety of things, including building a new home, buying a plot for a home, expanding their living space and buying pre-built homes or apartments from housing boards, development authorities, registered builders, etc. Even after construction has started, HBA can be used to pay back loans or advances obtained from the government, HUDCO or private parties.

According to the 2017 House Building Advance Rules (HBA), Central Government Employees are eligible for up to 34 months of basic salary with an HBA cap of Rs 25 lakh. The employee will only be able to get the lowest amount as HBA if the cost of the house or apartment is less than Rs 25 lakh. HBA can also be used to expand an existing home. Employees are eligible for 34 months of basic pay under this clause, up to a maximum of Rs 10 lakh, or the total cost of expansion up to Rs 10 lakh.

As per the 7th Pay Commission recommendations, Central Government Employees are eligible to get the least of the following as House Building Advance (HBA):

34 times of Basic Bay

Rs 25 lakh or, anticipated price of house, whichever is lower

The commission had recommended that the requirement of minimum of 10 years of continuous service to avail of HBA should be reduced to 5 years.

If both spouses are government servants, HBA should be admissible to both separately.

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