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HBA to CG Employees – Check How to calculate the interest

House Building Advance to Central Government Employees – How to calculate the interest for HBA

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. PURPOSE
HBA 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% –

30% –

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

On execution of 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. INTEREST

The 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.
Or
The 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.
Or
The 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 be allowed.

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 proper
manner.

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

 

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