NEW DELHI: Now, the Central government employees will be able to get more money as loan to build or buy their houses. In the move which may give boost to sluggish realty sector, the government on Thursday raised the maximum amount that a Central government employee can borrow from the government to Rs 25 lakh from Rs 7.50 lakh earlier.
The move is going to benefit about 50 lakh Central government employees across the country.
A senior official of the ministry of union urban affairs said that the Government has revised the House Building Advance (HBA) rules for Central Government Employees incorporating the accepted recommendations of the 7th Pay Commission.
“This attractive package is expected to incentivize the government employee to buy house or flat by taking the revised HBA if required. This will give a fillip to the Housing infrastructure sector,” added the officer.
With the revision, the cost ceiling limit of the house which a Central government employee can construct or purchase has been revised to Rs 1 crore with a provison of upward revision of 25% in deserving cases. The earlier cost ceiling limit was Rs 30 lakhs.
Moreover, 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 House Building Advance.
Apart from this, there is a provision for individuals migrating from home loans taken from Financial Institutions or Banks to HBA, if they so desire.
Now onwards, the rate of Interest on Housing Building Advance shall be at only one rate of 8.50 % at simple interest(in place of the earlier four slabs of bearing interest rates ranging from 6% to 9.50% for different slabs of HBA which ranged from Rs.50,000 to Rs 7,50,000).
As per the rules, this rate of interest will be reviewed every three years. All cases of subsequent tranches or installments of HBA being taken by the employee in different financial years will be governed by the applicable rate of interest in the year in which the HBA was sanctioned, in the event of change in the rate of interest.
The rules said that there is no change in the payment schedule and employees can pay the principal first in the first 15 years and interest thereafter in next five years in monthly installments.