I am finding it tough to find a bank that offers the full loan amount without any down payment. Is down payment really needed when one is in a good job and has an assured source of income?
—Rupali Mishra, Mumbai
The system of down payment exists as a factor that indicates the borrower's credit worthiness. The amount of real investment a borrower has in their purchase and their commitment to continue to make payments regularly are linked to this.
It acts as a sort of insurance for lenders, since borrowers know that if they default on their loan; they will not only lose the property but their down payment as well. It ensures that the buyer (borrower) has some stake in maintaining the property and it also means that the banks are protected from fall in interest rates since the amount that they lend is lower than the market value of the house. Therefore, if there is a fall, they can still recover the losses.
What are the key factors I need to be aware of when I choose a savings bank account?
—Varun Bist, Delhi
One of the first criteria to check would be to check the monthly balance requirement and other factors include debit card charges, cheque book facilities and charges, effectiveness of the online banking system, sweep facility and other interesting offers provided for an account holder.
I am planning to buy a house but the payment needs to be made at the total built up area. However, the actual area seems to be much lesser than what I am paying for. What is the difference between built up area and carpet area?
—Archana Bose, Pune
When they say built up area, this includes the area inside the house plus the area occupied by the walls, lobbies and corridors, basements, atriums, in some places lift areas, staircases, generator and electricity rooms etc.
Normally while purchasing a flat you will have to pay for the built up area whereas you will get to occupy or use exclusively only the carpet area. This is the usable area within the walls of the dwelling unit. Ever wondered why the sum total of the size of all your rooms is not the same as the so-called size of your flat for which you paid? This, you should clarify. Normally in huge societies with many common amenities, the carpet area could be as less as just 2/3rd of the