7th Pay Commission: Avail up to Rs 25 lakh at 7.1% interest for buying new home; details here

Good news for Central Government employees! They can benefit from the low-interest House Building Advance (HBA) till 31 March 2023. The current rate of interest of HBA is 7.1 per cent.

The interest rate of HBA was reduced by the Ministry of Housing and Urban Affairs to 7.1 per cent on 1 April 2022 via an Office Memorandum.

What exactly is HBA?

HBA is offered to Central Government employees as per the 7th Pay Commission’s recommendations. The employees can take interest-bearing advances for various purposes under the rules of HBA.

These purposes include expansion of living accommodation, constructing a new house, purchasing a plot for constructing a house, purchase of ready-built houses or flats from housing boards, development authorities, registered builders, etc.

There is the availability of HBA for the expansion of existing houses as well. Under this provision, the employees can have 34 months of basic pay (with Rs 10 lakh being the maximum limit) or a total expansion cost of up to Rs 10 lakh.

If the house or flat costs less than Rs 25 lakh, then the employee becomes eligible to receive the least amount only as HBA.

One can also avail of HBA for the repayment of a loan or advance taken from a government, HUDCO, or private sources, even if the construction has started.

Other rules:

As per the rules, the advance is going to be restricted to 80 per cent of the true cost of land and house construction, or cost expansion of living accommodation if the construction occurs in rural areas.

According to the recommendations of the 7th Pay Commission, the minimum continuous service requirement of central government employees to be eligible for HBA should be reduced from 10 years to five years.

The commission has also recommended that those existing employees, who have already availed of home loans from banks and other financial institutions, should also be allowed to participate in this scheme.

If both spouses are government servants, then the HBA should be applicable to both of them separately.

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