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 follows1. 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 Officials 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. 1. 2. Length of remaining service of the applicant. Retiring after 20 years. Retiring after 10 years but not later than 20 years. Retiring within 10 years Repaying Capacity 40% of pay @ 40% of pay @ plus 65% of * Retirement Gratuity 50% of pay @ plus 75% of * Retirement Gratuity.

3.

@ Pay means pay in the pay band 4. DISBURSEMENT OF ADVANCE: S. No. (1) (i) Purpose of HBA (2) For construction/enlargement (single or double storeyed). 50% 50% Disbursement (3) 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. 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.

(iii)

For purchase of land and construction (Double storeyed)

35% or actual cost 32.5% 32.5%

(iv) (v)

For purchase of ready built house/flat For acquiring flat/house from Co-operative Group Housing Society.

100% in one lumpsum. 20% 80% Towards purchase of land by the Society. in suitable installments on receipt of demand (prorate 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. (a) Purpose Purchase of registered plot on which construction can commence immediately. Purchase of ready built house. Time limit Sale deed to be produced within 2 months. Acquisition and mortgage to Government to be completed within 3 months. Should be utilised within one month of sanction.

(b)

(c)

Purchase/construction of new flat

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 Upto Rs. 50,000/Upto Rs. 1,50,000 Upto Rs. 5,00,000/Upto Rs. 7,50,000/-

Rate of Interest on HBA (Per Annum). 5% 6.5% 8.5% 9.5%

1. 2. 3. 4.

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. * 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. * Pay for the month following the month in which advance was drawn. * From the pay for the 18th month after date of payment of 1st installment.

Purchase of land and construction.

COMMENCEMENT OF RECOVERY(CONTD): Ready built flat.

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

* 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 Oct-98 Nov-98 Dec-98 Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 1 2 3 4 5 6 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00

IBB 81875 81875 81875 81875 81875 81875 81875 81875 81875 163750 163750 163750 163750 162250 160750 159250 157750 156250 154750

Installment

Interest 716 716 716 716 716 716 716 716 716 1433 1433 1433 1433

1500 1500 1500 1500 1500 1500

1420 1407 1393 1380 1367 1354

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02

153250 151750 150250 148750 147250 145750 144250 142750 141250 139750 138250 136750 135250 133750 132250 130750 129250 127750 126250 124750 123250 121750 120250

1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500

1341 1328 1315 1302 1288 1275 1262 1249 1236 1223 1210 1197 1183 1170 1157 1144 1131 1118 1105 1092 1078 1065 1052

30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04

118750 117250 115750 114250 112750 111250 109750 108250 106750 105250 103750 102250 100750 99250 97750 96250 94750 93250 91750 90250 88750 87250 85750

1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500

1039 1026 1013 1000 987 973 960 947 934 921 908 895 882 868 855 842 829 816 803 790 777 763 750

53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75

Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06

84250 82750 81250 79750 78250 76750 75250 73750 72250 70750 69250 67750 66250 64750 63250 61750 60250 58750 57250 55750 54250 52750 51250

1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500

737 724 711 698 685 672 658 645 632 619 606 593 580 567 553 540 527 514 501 488 475 462 448

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98

Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

49750 48250 46750 45250 43750 42250 40750 39250 37750 36250 34750 33250 31750 30250 28750 27250 25750 24250 22750 21250 19750 18250 16750

1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500

435 422 409 396 383 370 357 343 330 317 304 291 278 265 252 238 225 212 199 186 173 160 147

99 100 101 102 103 104 105 106 107 108 109 110

Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08

15250 13750 12250 10750 9250 7750 6250 4750 3250 1750 250 0 10248125

1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 250 163750

133 120 107 94 81 68 55 42 28 15 2 0 89671

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