HBA - House Building Advance

HBA – House Building Advance

·         Significant changes were made in the HBA for Govt employees due to acceptance of 7^th Pay Commission.

·         Here are some important changes compared to previous rules

SN	Item	6th PC	7th PC
1	Maxmimum HBA Amt	7.5 Lakhs	25 Lakhs
2	Interest Rate	8.5%	6% to 9.5% for different slabs
3	Expansion of House	1.8 lakhs	10 lakhs
4	Cost ceiling limit of the House	30 Lakhs	100 Lakhs ( with a proviso of upward revision of 25% in deserving cases i.e., up to 125 Lakhs)
5	If both spouses are Govt employees	Only one spouse is eligible	Both spouses are eligible either jointly or separately
6	Provision of 2.5% higher interest rate above the prescribed rate	Existed	Withdrawn

Salient features of HBA (after 7^th PC)

·         HBA amount: Least of Rs. 25 Lakhs or 34 months basic pay or cost of House/Flat or Repaying capacity.

·         Expansion of House:  Least of Rs.10 Lakhs or 34 months Basic pay or cost of expansion or repaying capacity.

·         Cost ceiling limit of the House  - Rs.1 Crore ( with a proviso of upward revision of 25% in deserving cases i.e., Rs.1.25 Crores)

·         Both spouses, if they are Govt employees are now eligible for HBA either jointly or separately.

·         Migration:  Provision of migration of existing Housing loan from financial institutions/Banks to HBA is existed.

·         Second Charge:  Availing Second Charge on the house for taking loans to fund balance amount from Banks/financial institutions has been simplified. No Objection certificate will be issued along with the sanction letter of HBA, if employee applied.

·         Simple interest rate 8.5%

·         HBA is admissible to an employee once in a life time.

·         Penalty provision (for not complying the conditions)  of 2.5% (higher rate of interest) is withdrawn

·         Recovery of HBA:  Principle in 180 months (15 years) and Interest in 60 months (5 years)

·         The House/flat can be insured with the private insurance companies which are approved by IRDA – Insurance Regulatory Development Authority.  

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