Employees working under the Central Government can now get an advance up to INR 25 lakhs as home building advance, thanks to a welcome move in the housing sector. They can avail the sum at 8.5% simple interest rate for constructing or purchasing a new home. This is a far better facility, as compared to the previous cap of INR 7.5%, with interest rates ranging between 6-9.5%.
According to a senior Housing & Urban Affairs Ministry official, one can save around INR 11 lakhs by seeking HBA in comparison to other lending bodies, considering the amount to be INR 25 lakhs and the repayment period to be 20 years. It is evident that the private bodies and other firms giving home loans of INR 25 lakhs for 20 years charge compound interest of around 8.35%. In these cases, they have to pay a monthly installment of INR 21,459. Thus, they need to pay around INR 51.50 lakhs at the end of 20 years, with an interest of INR 26.50 lakhs.
When the employees borrow Rs 25 lakh HBA, the interest is 8.5% (simple interest). This takes the monthly installment to INR 13,890 per month for 15 years. They need to pay INR 26,411 for the remaining 5 years, considering the time period to be 20 years. Therefore, the total money that they pay in the Home building advance scheme comes to INR 40. 84 lakhs including INR 15.84 lakhs of interest.
Well, the Housing & Urban Affairs Ministry formulates rules for home building from time to time. The latest house building advance rules favour the real estate industry in all parts of the country. The new sum allotted for the purpose is more than three times the previous amount, which was INR 7.50 lakhs. Besides, the employees will find a greater clarity while investing in the Real estate market, as the rate of interest has been fixed at 8.50%. Previously, the rate used to vary between 6 and 9.5%, which made it difficult for the homebuyers to calculate the total amount to be paid.
According to the new House building advance rules, the amount for expanding houses has also been raised. Previously, it was just INR 1.80 lakhs, but now the figures stand at an impressive INR 10 lakh.
The government has taken a progressive step to ensure Housing for all, where the authorities have also revised the cost ceiling limit of house construction by the employees. The earlier limit was INR 30 lakh, which has been fixed at INR 1 crores. A good time awaits the real-estate industry.
