The Government Authorities on Thursday announced a new proposal of an interest rate cut on House Building Advance (HBA). The interest rate of House Building Advance has reduced to 7.9 percent as earlier it was 8.5 percent. Earlier in the Budget 2019, Finance Minister, Smt. Nirmala Sitharaman announced that there would be interest rate cuts on house building advance and it will be linked with the 10-years government securities yields. Now the government employees can get a loan with less rate of interest to build or buy a house.
What is House Building Advance?
House Building Advance is a welfare measure and is stared in 1956. House Building Advance provides a rate of interest at affordable cost and gives discounts based on certain conditions. Depending upon the slabs of loans, the rate of interest on loans varies. As per the particular rules, the loan amount is issued to the beneficiaries. House Building Advance is specially introduced to support the government employees to fulfil their aim to construct a house or buy a home.
It is offered to employees of the Central Government with an aim to assist in building or buying a house or flat. The Ministry of Urban Development has introduced the House Building Advance with specific rules and implemented the service to all permanent or temporary employees with service of 5 continuous years or more. Based on the present rules, the House Building Advance will be sanctioned to eligible employees.
What is the Aim of the Proposed House Building Advance?
The proposed House Building Advance aims to support government employees to buy a new home or to construct a house. With the new regulations, the state and central government employee can take low-interest loan rates for building a house or to purchase a flat.
Key Points of Proposed HBA Interest Rate Cuts
- The rate of interest on a house construction advance loan reduced to 7.9% from 8.5 % for one year.
- The ministries have assigned authorities to sanction HBA to all government employees following the rules from October 1, 2019, onwards.
- The employees of the Government with five years of continuous service or more are eligible to enjoy the benefits of HBA.
- The scheme is used by Government Employees who want to buy a flat or own a plot to construct a house on their name either jointly with the wife.
- The interest rates are applicable to permanent government employees.
- Temporary government employees who have completed five years of service without gaps are also eligible to get the HBA benefits.
However, the implementation of House Building Advance will boost housing demand which will result in the residential real estate development. This would help the government employees to fulfil their dreams to buy a home or build a house.
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By: Shailaja K