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House Building Advance – 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: Constructing a new house on the plot owned by the official or the Official and the Official’s wife/husband jointly. Purchasing a plot and constructing a house thereon. Purchasing a plot under Co-operative Schemes and Constructing a house thereon or acquiring house through membership of Co-operative Group Housing Scheme. Purchasing /construction of house under the Self-Financing scheme of Delhi, Bangalore, U.P., Lucknow etc. Outright purchase of new ready-built house/flat Housing boards, Development Authorities and other statutory or semi-Government bodies and also from private parties.* 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. 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. 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 1stinstallment, 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 18thmonth 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 Share and Care

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