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Armed Forces Personnel Have Multiple Home Loan Options To Choose From

ICICI Securities 8 Mins 09 Jun 2022
  • Armed forces personnel may get promotional offers but it makes sense to compare interest rates across lenders
  • Ensure you check the conditions related to prepayment as some of these need to be settled before retirement

If you are an Armed Forces personnel and looking to buy a house, there are a number of home loan options you can choose from. While a normal individual has options of public and private sector lenders, Armed Forces personnel also get three options internally. Read on to know more.

House Building Advance (HBA)

The HBA facility is available not just to the armed forces but also to all government employees. They are usually available at a lower interest rate than the prevalent market rates. According to a notification from the Ministry of Housing and Urban Affairs, dated April 1, 2022, the interest rate on HBA for the financial year 2022-23 has been fixed at 7.1 per cent.

With private and public sector banks raising rates following the Reserve Bank of India’s rate increase earlier this month, they may be cheaper options in the future. The repayment of these loans are linked to the salary and debited directly.

These loans are available for construction of a house, buying a plot or a ready-to-move property and even for renovation of a property. It is also possible to migrate to this scheme if you have already borrowed from another lender.

However, the amount of loan available under this scheme may be limited. You need to check the terms and conditions before availing this loan.

Group Insurance Funds

The respective group insurance funds of the three armed forces also provides loans to the personnel. The Army Group Insurance Fund (AGIF), for instance, provides home loans to the tune of Rs 80 lakh to officers and to a lesser amount to non-officers. The Navy and the Indian Air Force also extends such loans to its officers and men through the Naval Group Insurance Scheme (NGIS), and the Air Force Group Insurance Scheme (AFGIS), respectively.

These loans can be availed for anything from buying a house, car or even white goods, such as computers. The only stipulation is that when someone takes premature retirement, they need to prepay the loan—either with their own funds or through a loan balance transfer to a bank.

All loans have to be settled before leaving the service. The rates are comparable with bank rates.

Special Offerings

Some banks have special home loan offers for armed forces personnel. Some of these offer a home loan interest rate lower than that available to civilian borrowers.

For instance, the State Bank of India’s SBI Shaurya Home loan scheme is only available for defence personnel. There is no processing fee or prepayment penalty under the scheme and it offers lower interest rate, apart from other benefits, according to the SBI website. It also provides a concession to woman borrowers.

Various other banks, including HDFC Bank, Bank of India and Axis Bank, offer loans especially designed for the defence personnel.

Many banks also have tie-ups with individual services—the Army, Airforce and Navy—and offer promotional schemes to service personnel.

It makes sense to compare the interest rates available under different schemes, internal and regular, before settling for one. Besides, you should also check the terms and conditions of repayment before borrowing.


Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code:-07730) and BSE Ltd (Member Code :103) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism. Please note that Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. I-Sec does not assure that the fund's objective will be achieved. Please note. NAV of the schemes may go up or down depending upon the factors and forces affecting the securities markets. Information mentioned herein is not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. Investors should consult their financial advisers if in doubt about whether the product is suitable for them. SEBI research analyst Registration no.-INH000000990. ICICI Securities Ltd. acts as a referral agent to ICICI Bank Ltd., ICICI Home Finance Company Limited and various other banks / NBFC for personal finance, housing related services etc. & the loan facility is subjective to fulfilment of eligibility criteria, terms and conditions etc.

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