The Role Of Agreement To Sell In Resale Home Loans
Many home loan buyers cannot wait to live in a house of their own. This is why they settle for buying a resale property and not an under-construction property.
Many legal, technical and procedural requirements are involved in buying resale property.
If you are a resale home loan buyer, it is important to understand the various safety measures you need to adopt while buying a resale flat to avoid any kind of hassle in the future.
One important document involved in a resale home loan is ATS-Agreement to Sell.
MakaaniQ tells you the role of ATS in resale home loans.
Understanding resale home loans
As the first step of purchasing resale property, you will need the chain of titles from the existing owner. You need to look into two aspects here. 1) Find out whether the existing owner is the first allotee or not. 2) If the owner is not the first allotee, then he must have purchased the property on resale from some other party, and the original documents relating to that sale and so on till the first purchase will be needed to get a resale home loan.
The document through which the title has been transferred in the name of present titleholder is called the “Immediate Title Deed (ITD)”. No lender will be ready to offer a resale home loan if you do not submit this document. All other documents prior to ITD are called “Chain Documents”.
Purchase of resale property from the first allotee
To finance the purchase of resale property where the sale agreement has been executed between the home loan applicant and the present allotee (to whom the developer had initially allotted the property), you must comply with the following: -
- Loan-to-Value (LTV) is calculated based on the market value (as per the technical report of an empaneled valuator of the bank) or the value according to the Agreement to Sell (ATS), whichever is the lowest.
- The sale agreement has to endorsed by the builder who possesses the property
- The No Objection Certificate (NOC) must be obtained from the builder regarding the sale of the proposed property
- The Tripartite agreement (TPT) must be executed between the applicant, the present allotee and the builder
- The stage of construction of the property must be at least 75 per cent as certified by the bank's empaneled technical valuator/agency
The role of the ATS
- A resale home loan cannot be funded without the Agreement to Sell (ATS)
- An agreement to sell states the agreement value or the sale value of the property, and funding is done based on this.
- The ATS along with other title deeds and chain documents is sent for the legal verification (i.e. to the team of empaneled lawyers) by the lender
- A resale home loan will not be appraised and disbursed without submitting the original copy of ATS
- Lenders give additional funding for amenities (i.e. mostly up to 40 per cent of the costs) and eco-friendly projects (like solar rooftops, Rainwater harvesting etc.) which must be clearly stated in the ATS
- Many lenders fund up to 10 per cent of the total resale home loan amount towards the “Furniture and Fixtures”, which must also be clearly specified in the ATS
- The resale home loan eligibility is calculated according to the ATS value