Legal Definitions - building and loan

Definition: Building and loan is another term for savings and loanassociation. These institutions were originally created to provide loans for building a house after the depositor had saved enough for a down payment.

Example: John wants to buy a house but doesn't have enough money for a down payment. He decides to open an account at a building and loan association and starts saving money every month. After a few years, he has saved enough for a down payment and is able to get a loan to buy his dream home.

Explanation: The example illustrates how building and loan associations work. They encourage people to save money by offering them a safe place to deposit their funds. Once the depositor has saved enough money for a down payment, they can apply for a loan to buy a house. This system helps people achieve their dream of homeownership while also promoting savings.