Hi
First and foremost, the seller should obtain a No Objection Certificate from both his bank and the builder as the seller amount outstanding against both of them.
Since you wish to obtain a home loan from the same bank, the procedure is as follows:
1) First you need to obtain your loan sanction and fulfill conditions for loan disbursement.
2) The bank should issue a No objection to seller to enter in to sale deed with you.
3)Seller has to settle all the amount outstanding with the builder and builder also has to issue a No Objection certificate.
4) Based on No Objection Certificate issued by the bank, Seller to execute a registered sale deed in your favour.
5) Based on registered sale deed, you should execute a memorandum of deposit of title deeds to your bank
6) Your bank as a lender will create a new loan account in your name.
7) Then thereafter the money will be transferred internally from your loan account to seller loan account.
8) Based on registered sale deed, you should execute a memorandum of deposit of title deeds to your bank
The 1% solicited by the seller is probably the profit he is making in the whole transaction. You are the best judge to decide on this
Hope this information is useful.