10 Nov, 2017 10:23a.m.

Govt. hikes HBA to 25 Lakhs at a simple interest rate of 8.50%

Central government employees can now take advance up to Rs 25 lakhs for construction or purchase of the house at a simple interest rate of 8.50 percent. The move is aimed at giving a fillip to the housing sector.

Earlier, the maximum borrowing limit was Rs 7.50 lakh with interest rate slabs ranging from 6 per cent to 9.50 per cent. 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 loan of Rs 25 lakh is taken for 20 years at the prevailing rate 8.35 per cent (compound interest) from banks like the SBI, the monthly installment 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. However, if the same amount is borrowed under the HBA at 8.50 per cent (simple interest) for 20 years, the monthly installment comes to Rs 13,890 for first 15 years and Rs 26,411 per month for the remaining period, he said.

The cost ceiling limit of the house which an employee can construct/purchase has also been revised to Rs 1 crore with a provision of upward revision of 25 per cent. The earlier cost ceiling limit was Rs 30 lakh, it said.

Both spouses, if they are central government employees, are now eligible to take HBA either jointly, or separately.

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