Revising the house building advance (HBA) rules incorporating the accepted recommendations of the 7th Pay Commission, the government also increased the amount that a central government employee can borrow for expansion of their homes to 34 months of basic pay to a maximum of Rs 10 lakh, from Rs 1.80 lakh earlier.
- The total amount of advance that a central government employee can borrow from government has been revised upwards.
- The employee can up to borrow 34 months of the basic pay subject to a maximum of Rs 25 lakh, or cost of the house/flat, or the amount according to repaying capacity, whichever is the least for new construction/purchase of new house/flat. Earlier this limit was only Rs 7.50 lakh.
- The cost ceiling limit of the house which an employee can construct/ purchase has been revised to Rs 1.00 crore with a proviso of upward revision of 25% in deserving cases. The earlier cost ceiling limit was Rs 30 lakh.
- 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.
- The house/flat constructed/purchased with the help of House Building advance can be insured with the private insurance companies which are approved by Insurance Regulatory Development Authority (IRDA).
- The methodology of recovery of HBA shall continue as per the existing pattern recovery of the principal first in the first fifteen years in 180 monthly instalments and interest thereafter in next five years in 60 monthly instalments.