Under the House Building Advance, 52 lakh central government employees can raise money to build a house at the rate of 7.9 percent. There is a simple interest on this amount.
This advance can be available up to a maximum of 25 lakhs.
7th Pay Commission latest news: During the Corona period, the Central Government announced House Building Advance for its 52 lakh employees. It was announced only in June 2020 after the arrival of Corona. Under this scheme, the central government announced to provide funds at affordable rates to its employees to build houses.
Under House Building Advance, 52 lakh central government employees can raise money to build a house at the rate of 7.9 percent. The benefit of this scheme can be availed till 31 March 2022. This special scheme was started from 1 October 2020. Prior to that in September 2020, Finance Minister Nirmala Sitaran had announced a cut in the interest rate for House Building Advance. Recently, keeping in mind the Seventh Pay Commission, revision was also done in House Building Advance. It will be 24 times the basic salary of any central employee or maximum 25 lakhs, whichever is less.
Maximum Rs 10 lakh for house extension
If the house is already built, then for its expansion, this advance is maximum 10 lakh rupees, 34 times the basic salary and the lowest amount is available in the form of advance in the expenditure on the expansion of the house. The biggest feature of this loan is that the advance is repaid over a total of 20 years. In 15 years i.e. 180 EMIs, only the principal is paid. Interest is paid in subsequent 5 years i.e. 60 EMIs. This is the reason why the net return on house building advance is very low.
The payment has to be doubled on the general home loan
If a person takes a home loan, he has to deposit almost double in 20 years. The biggest reason for this is that the major part of the EMI has to be paid only as interest between the initial 6-8 years. A very small portion of the principal is repaid. This is the reason why the interest amount is very high for years. Under HBA, the principal is repaid before the full EMI. The interest earned during this period is paid back together in the last 5 years.
What are the conditions for Temporary Employee?
There are certain conditions for availing this advance. For example, it is necessary to build a house on its own land. Even if you want to expand the house, this advance can be used for this. Only Permanent Employee will get the benefit of this. Even if a temporary employee has worked continuously for more than 5 years, he will get the benefit of house building advance.
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