Housing Finance

HOUSING FINANCE
SUBMITTED BY: MASAKO EVODIA LEKHANYA

HOUSING FINANCE
 A housing finance is refers to finance provided to individuals or group of
individuals including co-operative societies for purchase/build house or houses.
 Housing Finance Company is a form of non-banking financial company (NBFC)
which is regulated by the National Housing Bank (NHB), and it is engaged in the
principal business of financing of acquisition or construction of houses that
includes the development of plots of lands for the construction of new houses.
ACTIVITIES UNDERTAKEN BY HOUSING
FINANCE
 Housing finance companies enable the distribution of government benefits. If
governments want to provide subsidized housing loans to a certain section of the
population, then this is done via housing finance companies. It is these companies
which act as the distributors of the national government
 Housing finance companies are instrumental in providing finance to housing boards
which are engaged in the process of building satellite towns near important urban
areas. By building satellite towns, these organizations help to decongest urban areas
and provide better housing facilities at affordable prices.
.
 Housing finance companies also provide other facilities, such as lease rental
discounting. This helps real estate investors to liquidate their money without selling
their property. Instead of selling their property, investors can give it on a long term
lease. They can then discount the lease proceeds and get the present value right now.
 Housing finance companies are known to provide finance to people who cannot meet
the stringent requirements of commercial banks. For instance, in many cases,
prospective buyers do not have the money to make a down payment on their housing
loans. In such cases, the housing finance companies provide loans with less down
payment. In order to cover their risks, they make buyers purchase additional insurance.
EXAMPLE OF HOUSING FINANCE
COMPANIES IN INDIA
 Housing Development Finance Corporation Ltd.
 Indiabulls Housing Finance Ltd.
 LIC Housing Finance Ltd.
 SBI Home Loans
 ICICI Bank Home Loans
 Bajaj Housing Finance Ltd. etc.
INDIAN HOUSING FINANCE SYSTEM
 The Housing Finance Company is regulated by the National Housing Bank. Any non-
banking company can operate as a housing finance company, subject to the fulfilment of
basic requirements as specified in the companies Act 2013. These entities are set up under a
license provided by NHB to provide home loans as per the NHB guidelines, and are also
registered under Companies Act.
 The company should have its primary business of providing finance for housing.
 The company should obtain a certificate of registration (COR) from the NHB. Any company
conducting its business without a COR is an offense punishable under the provisions of the
NHB Act, 1987. The NHB can also demand the winding up of such companies.
 The company should have minimum Net Owned Fund of Rs 10 Crore
ADVANTAGES OF HOUSING
FINANCE
 Among the financial services, housing finance creates employment, both directly and indirectly.
 Due to housing finance, there is a vertical expansion and rebuilding of dilapidated houses and remodelling
of the existing houses.
 Rural housing develops not only rural areas but prevents migration of labor to urban areas.
 Housing finance helps in creation of more houses which result in building more infrastructure facilities,
such as roads, electricity generation, drinking water facilities, etc.
 Factories and industrial establishments create townships by providing more housing facilities to their
employees. Housing finance thereby reduces congestion in urban areas.
 Industries such as cement, brick manufacturing, sanitary products, electrical fittings and glass industries
experience more demand due to house construction.
TYPES OF HOUSING FINANCE
 Home Purchase Loans  Stamp Duty Loans
 Home Construction Loans  Bridge Loans
 Home Extension Loans  Balance Transfer Loans
 Home Conversion Loans  Re-finance Loans
 Land Purchase Loans  Loans to NRIs
ELIGIBILITY OF HOME LOAN
Eligibility for a home loan is calculated based on multiple factors that a lender uses to determine a
borrower’s capability to repay and the risk involved in lending. The basic factors that determine one’s
eligibility include the following:
 The applicant may be a resident of India or a Non-Resident Indian to avail of a home loan.
 The minimum age of the home loan applicant is 18 and 21 years, depending on the company
requirements and policies. The maximum age of the home loan applicant is 70 years at the time of
maturity of the loan.
 The individual should have a monthly income of at least Rs.25000 in order to apply for Home Loans.
 The applicant should have a credit score of at least 600 in order to be eligible for a home loan.
Note: Loan eligibility criteria differ depending on a bank/lender. Approvals are based on borrowers'
income, credit profile, and existing relationship with the bank.
THANK YOU
M.E.LEKHANYA

Housing Finance

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HOUSING FINANCE

SUBMITTED BY: MASAKO EVODIA LEKHANYA

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