According to the Union Housing and Urban Affairs Ministry, the new interest rate has come into force from October 1.
In some good news for government employees during the festive season, the government has an interest rate on house building advance (HBA) for all central government employees.
- The interest rate on House Building Advance for central government employees has been cut to 7.9%
- HBA works out to be a cheaper option than a home loan for central government employees
“The interest rate on House Building Advance (HBA) for Central Government Employees will be 7.9% from October 1, 2019, for a period of one year,” said a statement issued by the Ministry of Housing and Urban Affairs. Till last month, government employees had to pay an interest rate of 8.5% per annum on any house building advance they take.
The move will boost housing demand and also benefit lakhs of central government employees to want their own house.
Central government employees are eligible for a House Building Advance to not only buy a new flat from private builders, societies, housing boards, etc but also for purchasing a housing plot and even construction of a new house. HBA is similar to a home loan.
The interest rates are fixed by the Ministry of Housing and Urban Affairs in consultation with the finance ministry. The rate revision has been done for a period of one year, according to the announcement.
“The HBA is admissible to permanent employees and all those temporary employees also who have rendered 5 years of continuous service,” the statement said.
Finance Minister Nirmala Sitharaman had last month announced that the interest rates for HBA will be lowered.
The total amount of advance that a central government employee can borrow is up to 34 months of the basic pay subject to a maximum of ₹25 lakh, or cost of the house, or the amount according to repaying capacity, whichever is the least for new construction/purchase of new house/flat.
The HBA amount for expansion of the house is capped at ₹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.