Saturday, November 24, 2012

Understand the Product Vendor Liability

It’s been a big worry to the buyers and to the seller when then want to purchase or sell the property which is under a loan. It is a very simple process which gives you the benefit of selling the property without closing the home loan which is there on the property. 

Banks have designed a product called “Vendor Liability” which gives you this benefit of availing the Home loan availing home loan on a property which has a loan already in the name of the vendor or seller. In the process of this loan a customer will go for a home loan as usual like in a normal home loan case. But the documents submitted to the process vary a bit to this product. Along with the regular income documents the vendor need to provide his Loan Account statement, Outstanding Letter and List of documents submitted to the bank at the time of availing the loan i.e list of property documents. These documents are to be submitted to the bank at the initial stage of the home loan processing only.

The process begins with the verification of Applicants and Co-applicants Residence, Office, Pay slips and Bank Statements. The property documents are scrutinized by a panel advocate and the property is evaluated by a technical valuer who will certify the property cost by taking the market value into consideration. Post successful verification of all the documents and Property the disbursement process is initiated by taking customers signatures on the home loan agreements. Customers will be given sanction letter from the bank which gives all the details of loan amount sanctioned, interest rate, tenure, repayment conditions and EMI details. Customer need to make all the margin payments to the vendor before initiating the disbursement process through bank and the same proofs have to be submitted in original to the bank failing which the process will not be initiated.

The disbursement will be done up to 80% of the property cost or Agreement value or Documented Value or the sanctioned loan whichever is less. Bank will disburse the outstanding loan amount which is there on the property on the vendor’s name directly in the name of the bank which has funded the loan to the vendor. The vendor need to register the property on the vendee name after closing the loan amount and post receiving the original documents from the bank and submit the registered documents in the bank which funded loan to the vendee. Post submission of the registered documents with the bank remaining sale consideration or the pending loan amount is released. It has been a best product to the Vendor’s with a liability to sell the property without any hassles. As it comes under Home Loan only all the Tax Exemptions under section 80© of income tax act are applicable on the Principal and Emi components paid to the bank.