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       Central govt employees can now take advance up to Rs. 25 lakh for new home
         Posted on :09:09:36 Nov 10, 2017
       Last edited on:09:09:36 Nov 10, 2017
         Tags: Central govt employees can now take advance u

NEW DELHI: Central government employees can now take advance up to Rs. 25 lakh for construction or purchase of a house at a simple interest rate of 8.5%, a move aimed at giving a fillip to the housing sector.

Earlier, the maximum borrowing limit was Rs. 7.5 lakh with interest rate slabs ranging from 6% to 9.5%.

A senior official in the Ministry of Housing and Urban Affairs said that around Rs. 11 lakh could be saved by availing "House Building Advance (HBA)" as compared to borrowing from lending institutions on a Rs. 25-lakh loan for 20-years period.

He explained that if a loan of Rs. 25 lakh is taken for 20 years at the prevailing rate 8.35% (compound interest) from banks like the SBI, the monthly instalment comes to Rs. 21,459. "The total amount to be paid at the end of 20 years comes to around Rs. 51.50 lakh, including interest component of Rs. 26.50 lakh," he added.

However, if the same amount is borrowed under the HBA at 8.5% (simple interest) for 20 years, the monthly instalment comes to Rs. 13,890 for first 15 years and Rs. 26,411 per month for the remaining period, he said.

"The total money that has to be paid comes to around Rs. 40.84 lakh, including interest component of Rs. 15.84 lakh."

The ministry makes rules for HBA for central government employees from time to time.

"Employee can borrow up to 34 months of the basic pay subject to a maximum of Rs. 25 lakhs, or cost of the house/flat, or the amount according to repaying capacity, whichever is the least for new construction/purchase of new house/flat," the release said, quoting the revised HBA rules.

Both spouses, if they are central government employees, are now eligible to take HBA either jointly, or separately. Earlier, only one spouse was eligible for such facility.

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