Interest rate of House Building Advance (HBA) to Central Government employees has been reduced for the financial year 2022-23. Based on the 10-year G-Sec yield, the government sets the interest rate of House Building Advance (HBA).
The Ministry of Housing & Urban Affairs has set the interest rate of House Building Advance (HBA) to Central Government employees at 7.1 per cent for advances available from April 1, 2022 till March 31, 2023.
Earlier, for FY 2021-22, the rate of interest on House Building Advance to Central Government Employees was set at 7.9 per cent from October 1, 2020 to March 31, 2022 i.e., for 18 months.
By availing the House Building Advance (HBA), the Central Government employees can construct their own home.
The total amount of HBA that a central government employee can borrow is up to 34 months of the basic pay subject to a maximum of Rs. 25 lakh, or the cost of the house, or the amount according to repaying capacity, whichever is the lower for new construction/purchase of new house/flat. This is as per the recommendations of the 7th Pay Commission and the HBA 2017 rules.
The HBA comes at simple interest from the date of payment of installment. Under HBA rules, the principal is to be repaid in the first fifteen years in 180 monthly installments and interest thereafter in the next five years in 60 monthly installments.
As far as availability is concerned, House Building Advance can be availed towards repayment of bank loan taken for the purpose of construction, purchase of new house or flat. And, any permanent employee and all those temporary employees also who have 5 years of continuous service can avail House Building Advance to own a home.