Housing Finance Corporation
The Housing Finance Corporation (HFC) was established in 1980, under the Housing Finance Act, 43/1980. It is a state-owned organization governed by a nine-member Board of Directors, appointed by the Council of Ministers, usually for a three-year term.
The main aim of the HFC is to provide long-term housing loans, giving priority to the lower and middle-income groups. To implement the purpose of its establishment, HFC provides a range of savings accounts to attract deposits from the public. It uses most of these funds to provide mortgage loans to families, mostly young couples, for the acquisition of their first home. HFC accounts for a substantial part of the market for housing loans in Cyprus.
As a specialized banking institution, HFC is under the supervision and control of the Central Bank of Cyprus. Its annual accounts are audited by the Auditor-General of the Republic, who submits an annual report about the affairs of the Corporation to the Minister of Finance and the House of Representatives.
Housing and Social Loans
Besides providing its own housing loans, the Corporation is instrumental in the implementation of the government’s social policy, especially in the area of housing. It provides several categories of housing and social loans, including special schemes for:
- Large families with four or more children
- Small and isolated rural and mountain communities
- Very low income families
- Depressed urban and rural areas along the buffer zone
- Various types of housing and other social loans for persons displaced during the 1974 invasion and occupation by Turkey of the northern part of Cyprus
- Housing, educational and other social loans approved by the Central Agency for Equal Distribution of Burdens.
Purpose of Loans
Normally the housing loans of HFC are given for one of the following purposes:
- To build a house on private land owned by the applicant
- To purchase a house or apartment either from the private sector or from the Cyprus Land Development Corporation (CLDC)
- To purchase a housing plot from the CLDC
- To extend, repair or refurbish an existing house.
Main Terms of Loans
HFC makes every effort so that its loans compare favourably with the loans provided by other financial institutions. The main terms of HFC loans are briefly described below:
- The interest rate charged normally varies according to the income of the family of the borrowers and the size of the housing unit to be financed. Interest rates are generally slightly lower than normal market rates.
- A repayment period of up to 30 years is allowed for borrowers.
- Loans are normally secured by a mortgage on the property to be financed.
- The maximum amount of loan to a family is presently €250.000.
- Loans provided under the various government schemes for specified groups of the population or designated areas of the island, as well as loans approved by the Central Agency for Equal Distribution of Burdens, enjoy special low interest rates and other favourable terms.
For a number of years, HFC and its clients enjoyed certain tax exemptions and incentives, aimed mainly to encourage the accumulation of the necessary funds at HFC. Since the accession of Cyprus to the EU and as a result of harmonization with EU policies, all such incentives and exemptions have been abolished and HFC now operates mostly on commercial terms.
Besides its headquarters and main branch in Nicosia, HFC maintains branches in all major towns of the island, namely Limassol, Larnaka, Pafos and Paralimni.
For more details and updates please refer to:
Tel.: +357 22 503333