House Building Advance to Central Government Employees

 1.The Scheme of House Building Advance to Central Government Employees is aimed at providing assistance to the Government employees to construct/acquire house/flats of their own.The scheme was introduced in 1956, as a welfare measure. Ministry of Urban Development & Poverty Alleviation act as the nodal Ministry for the same. 2. House Building Advance is admissible to all those temporary employees also who have rendered 10 years of continuous service. The Ministries/Departments are delegated powers to sanction House Building Advance to their employees in accordance with the House Building Advance Rules. 3.With effect from 27-11-2008, the following provisions of grant of House Building Advance shall be in operation, until further orders:-(i).The maximum limit for grant of HBA shall be 34 months’ of pay in the pay band subject to a maximum of Rs. 7.50 lakh or cost of the house or the repaying capacity whichever is the least, for new construction/purchase of new house/flat.(ii).The maximum limit for grant of HBA for enlargement of existing house shall be 34 months’ pay in the pay band subject to a maximum of Rs. 1.80 lakh or cost of the enlargement or repaying capacity, whichever is the least.(iii).The cost ceiling limit shall be 134 times the pay in the pay band subject to a minimum of Rs.7.50 lakh and a maximum of Rs.30 lakh relaxable up to a maximum of 25% of the revised maximum cost ceiling of Rs.30 lakh.  4. The rate of interest on House Building Advance is between 5% to 9.5% ,depending on the loan amount. 5. The repaying capacity of Govt. servants who have more than 20 years of remaining service has been revised from 35% to 40% of pay. (Pay means pay in the pay band). 6. The salient features of House Building Advance Rules are as follows- 1. ELIGIBILITY

Permanent Government employees. Temporary Government employees who have rendered at least 10

years continuous service. To be granted once during the entire service.

If both the husband and wife are Government of India employees and eligible for HBA, it shall be admissible to only one of them.

 2. PURPOSEHBA is granted for:

1. Constructing a new house on the plot owned by the official or the Official and the Official’s wife/husband jointly.

2. Purchasing a plot and constructing a house thereon. 3. Purchasing a plot under Co-operative Schemes and Constructing a

house thereon or acquiring house through membership of Co-operative Group Housing Scheme.

4. Purchasing /construction of house under the Self-Financing scheme of Delhi, Bangalore, U.P., Lucknow etc.

5. Outright purchase of new ready-built house/flat Housing boards, Development Authorities and other statutory or semi-Government bodies and also from private parties.*

6. Enlarging living accommodation in an existing house owned by the official or jointly with his/her wife/husband. The total cost of the existing structure (excluding cost of land) and the proposed additions should not exceed the prescribed cost ceiling.

7. Repayment of loan or advance taken from a Government or HUDCO or Private source even if the construction has already Commenced, subject to certain conditions.

8. Constructing the residential portion only of the building on a Plot which is earmarked as a shop-cum-residential plot in a Residential colony.

* Private party means registered builders but not private individuals. 3. CONDITIONS:a) The applicant or spouse or minor child should not already own a house in the town/Urban agglomeration where the house is proposed to be constructed or acquired. b) The title to the land should be clear. The land may be owned either:- by the Government employee; or – jointly by the Government employee and spouse. c) COST CEILING                                            134 times of pay in the pay band subject to a minimum of Rs. 7.50 lakh and a maximum of Rs.30 lakh Administrative Ministry may relax the cost ceiling   to 25% of cost ceiling mentioned above in the individual cases on merits.(Effective from 27th November, 2008) d) AMOUNT OF ADVANCE:

will be the LEAST of the following:-

(i) 34 times the pay in the pay band.(ii) The cost of construction.**(iii) Rs. 7,50,000/- ***(iv) Repaying Capacity.** 80% of cost in rural areas.*** Rs. 1,80,000/- in case of enlargement of existing house.e) REPAYING CAPACITY:- Repaying Capacity is computed on the following basis:-

S. No.

Length of remaining service of the applicant.

Repaying Capacity

1. Retiring after 20 years. 40% of pay @

2. Retiring after 10 years but not later than 20 years.

40% of pay @ plus 65% of * Retirement Gratuity

3. Retiring within 10 years 50% of pay @ plus 75% of * Retirement Gratuity.

@ Pay means pay in the pay band

 4. DISBURSEMENT OF ADVANCE:

S. No.

Purpose of HBA Disbursement

(1) (2) (3)

(i) For construction/enlargement (single or double storeyed).

50% -

50%

on execution of mortgage deed

on construction reaching plinth level (Ground Floor).

(ii) For purchase of land and construction (Single storeyed)

40% or – actual cost

30% –

for purchase of plot on execution of agreement and production of Surety Bond.

On execution of

30% – Mortgage deed.

On construction reaching plinth level.  

(iii) For purchase of land and construction (Double storeyed)

35% or actual cost

32.5% –

32.5% –

for purchase of plot on execution of agreement and production of Surety bond.

On execution of the mortgage deed.

On construction reaching the plinth level.  

(iv) For purchase of ready built house/flat

100% – in one lumpsum.

(v) For acquiring flat/house from Co-operative Group Housing Society.

20% –

80% –

Towards purchase of land by the Society.

in suitable installments on receipt of demand (pro-rate basis)

(vi) For purchase of flat under SFS of Development Authorities etc.

  No payment for initial registration Deposit. May be released in not more than 5 instalments. But the fifth and final instalment should not be less than 10% and is to be released for

making final payment.

 5. TIME SCHEDULE FOR UTILISATION OF HBA:

S. No.

Purpose Time limit

(a) Purchase of registered plot on which construction can commence immediately.

Sale deed to be produced within 2 months.

(b) Purchase of ready built house. Acquisition and mortgage to Government to be completed within 3 months.

(c) Purchase/construction of new flat Should be utilised within one month of sanction.

 6. REPAYMENT OF ADVANCE:The recovery of advance shall be made in not more than 180 monthly installment and interest shall be recovered thereafter in not more than 60 monthly installments. In case Government servant is retiring before 20 years, repayment may be made in convenient installments and balance may be paid out of Retirement Gratuity. 7. INTERESTThe rate of interest on Housing Building Advance with effect from 1st April, 2003 are as follows:-

S. No.

Amount of Advance sanctioned to a Government Servant

Rate of Interest on HBA (Per Annum).

1. Upto Rs. 50,000/- 5%

2. Upto Rs. 1,50,000 6.5%

3. Upto Rs. 5,00,000/- 8.5%

4. Upto Rs. 7,50,000/- 9.5%

 8.COMMENCEMENT OF RECOVERY:

Construction of a house or enlargement of living accommodation

* From pay for the month following the completion.

OrThe pay for the 18th month after date of payment of the 1st installment, whichever is earlier.

Purchase of land and construction.

* From pay for the month following the completion of the house.

OrThe pay for the 24th month after date of drawl of installment for purchase of land, whichever is earlier.

COMMENCEMENT OF RECOVERY(CONT’D):

Ready built flat. * Pay for the month following the month in which advance was drawn.

Purchase of Flat under SFS from Development Authority/Housing Society.

* From the pay for the 18th month after date of payment of 1st installment.

* The sanctions of HBA should invariable stipulate a higher rate of interest at 2.5% above prescribed rates with the stipulation that if conditions attached to the sanction are fulfilled, rebate of interest to the extent of 2.5% will beallowed. 9. CREATION OF SECOND MORTGAGE:The Government servants who have obtained HBA from the Government may be permitted to create a second charge on the property provided they obtain prior permission of the Head of the Department and the draft deed of second mortgage is submitted to the Head of the Department for scrutiny. Such a second charge may be created only in respect of loans to be granted for meeting the balance cost of houses/flats by recognised financial institutions. 10.PROVISIONS FOR SAFE RECOVERY OF HOUSE BUILDING ADVANCE:     (i). As a safeguard of the House Building advance, the loanee Government employee has to insure the house immediately on completion or purchase of

the house, as the case may be, at his own cost with Life Insurance Corporation of India and its associated units.   The house/flat constructed/purchased with the help of House Building advance can also be insured with the private insurance companies which are approved by Insurance Regulatory Development Authority(IRDA). However, the insurance should be taken for a sum not less than the amount of advance against damage by fire, flood and lightning, and has to be continued till the advance together with interest is fully repaid to Government.  (ii).The house constructed/purchased with the help of House Building Advance has also be mortgaged in favour of the President of India within a stipulated time unless an extension of time is granted by the concerned Head of the Department. After completion of the recovery of the advance together with interest thereon, the mortgage deed is re-conveyed in a propermanner.

 

Here we have given an example, how to calculate the interest amount for House Building Advance.

An employee has drawn House Building Advance as two installments of Rs.163750.

His first installment given on October 98 and the second installment on July 99.

He started to repay from November 99 with monthly Rs.1500.

Here we calculate the interest amount for the employee has to pay…

Year/Month IBB Installment Interest

Oct-98 81875 716

Nov-98 81875 716

Dec-98 81875 716

Jan-99 81875 716

Feb-99 81875 716

Mar-99 81875 716

Apr-99 81875 716

May-99 81875 716

Jun-99 81875 716

Jul-99 163750 1433

Aug-99 163750 1433

Sep-99 163750 1433

Oct-99 163750 1433

1 Nov-99 162250 1500 1420

2 Dec-99 160750 1500 1407

3 Jan-00 159250 1500 1393

4 Feb-00 157750 1500 1380

5 Mar-00 156250 1500 1367

6 Apr-00 154750 1500 1354

7 May-00 153250 1500 1341

8 Jun-00 151750 1500 1328

9 Jul-00 150250 1500 1315

10 Aug-00 148750 1500 1302

11 Sep-00 147250 1500 1288

12 Oct-00 145750 1500 1275

13 Nov-00 144250 1500 1262

14 Dec-00 142750 1500 1249

15 Jan-01 141250 1500 1236

16 Feb-01 139750 1500 1223

17 Mar-01 138250 1500 1210

18 Apr-01 136750 1500 1197

19 May-01 135250 1500 1183

20 Jun-01 133750 1500 1170

21 Jul-01 132250 1500 1157

22 Aug-01 130750 1500 1144

23 Sep-01 129250 1500 1131

24 Oct-01 127750 1500 1118

25 Nov-01 126250 1500 1105

26 Dec-01 124750 1500 1092

27 Jan-02 123250 1500 1078

28 Feb-02 121750 1500 1065

29 Mar-02 120250 1500 1052

30 Apr-02 118750 1500 1039

31 May-02 117250 1500 1026

32 Jun-02 115750 1500 1013

33 Jul-02 114250 1500 1000

34 Aug-02 112750 1500 987

35 Sep-02 111250 1500 973

36 Oct-02 109750 1500 960

37 Nov-02 108250 1500 947

38 Dec-02 106750 1500 934

39 Jan-03 105250 1500 921

40 Feb-03 103750 1500 908

41 Mar-03 102250 1500 895

42 Apr-03 100750 1500 882

43 May-03 99250 1500 868

44 Jun-03 97750 1500 855

45 Jul-03 96250 1500 842

46 Aug-03 94750 1500 829

47 Sep-03 93250 1500 816

48 Oct-03 91750 1500 803

49 Nov-03 90250 1500 790

50 Dec-03 88750 1500 777

51 Jan-04 87250 1500 763

52 Feb-04 85750 1500 750

53 Mar-04 84250 1500 737

54 Apr-04 82750 1500 724

55 May-04 81250 1500 711

56 Jun-04 79750 1500 698

57 Jul-04 78250 1500 685

58 Aug-04 76750 1500 672

59 Sep-04 75250 1500 658

60 Oct-04 73750 1500 645

61 Nov-04 72250 1500 632

62 Dec-04 70750 1500 619

63 Jan-05 69250 1500 606

64 Feb-05 67750 1500 593

65 Mar-05 66250 1500 580

66 Apr-05 64750 1500 567

67 May-05 63250 1500 553

68 Jun-05 61750 1500 540

69 Jul-05 60250 1500 527

70 Aug-05 58750 1500 514

71 Sep-05 57250 1500 501

72 Oct-05 55750 1500 488

73 Nov-05 54250 1500 475

74 Dec-05 52750 1500 462

75 Jan-06 51250 1500 448

76 Feb-06 49750 1500 435

77 Mar-06 48250 1500 422

78 Apr-06 46750 1500 409

79 May-06 45250 1500 396

80 Jun-06 43750 1500 383

81 Jul-06 42250 1500 370

82 Aug-06 40750 1500 357

83 Sep-06 39250 1500 343

84 Oct-06 37750 1500 330

85 Nov-06 36250 1500 317

86 Dec-06 34750 1500 304

87 Jan-07 33250 1500 291

88 Feb-07 31750 1500 278

89 Mar-07 30250 1500 265

90 Apr-07 28750 1500 252

91 May-07 27250 1500 238

92 Jun-07 25750 1500 225

93 Jul-07 24250 1500 212

94 Aug-07 22750 1500 199

95 Sep-07 21250 1500 186

96 Oct-07 19750 1500 173

97 Nov-07 18250 1500 160

98 Dec-07 16750 1500 147

99 Jan-08 15250 1500 133

100 Feb-08 13750 1500 120

101 Mar-08 12250 1500 107

102 Apr-08 10750 1500 94

103 May-08 9250 1500 81

104 Jun-08 7750 1500 68

105 Jul-08 6250 1500 55

106 Aug-08 4750 1500 42

107 Sep-08 3250 1500 28

108 Oct-08 1750 1500 15

109 Nov-08 250 1500 2

110 Dec-08 0 250 0

10248125 163750 89671

Interest amount = 10248125 / 1200 X 10.5 = Rs.89671