Housing Finance Companies (HFC’s) are a category of Non Banking finance companies. The only difference is they specialize in extending loans only to housing / real estate sector. Though there is nothing exciting about HFC’s, their business model is indeed exciting. Once an individual takes a housing loan, his property is mortgaged and the loan duration is usually 7 years to 10 years.
With the dream of every indian is to own a house, 98% of them opt for a housing loan. When they do so, they mortgage their home and repay their loan by Equated Monthly Instalments (EMI).
The beauty of HFC’s is :
- They have collateral security (mortgaged property).
- Long term loan (usually 7 years to 10 years ) – means – steady source of interest income.
- And acquiring these clients is a one time process. Payment (EMI) mostly happens by EMI. Hence very little need to follow up.
- If the borrower does not pay up, HFC’s can take pocession of the mortgaged property and sell it / auction it.
- But Indians mostly donot give up their home. They some how muster their resources and pay up their EIM. That makes life easy for HFC’s.
You have lot of HFC’s listed in the stock market. By investing in them, you are bound to make good returns. Infact investing in HFC’s is the safest way to equity investing. You have limited downside and unlimited upside.
Following are few of the listed HFC’s. The list is not inclusive. It is just an indication.
- HDFC Ltd
- Lic Housing Finance Company
- Can fin homes
- Gruh Finance
- DHFL finance
- India Bull Housing
- PNB Housing Finance
- Repco Home Finance
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