A Simple Guide on Home Loan Disbursement

If you want to buy a new home, you may invariably look for a home loan to get the desired funds. It could be the first step towards accomplishing your long-cherished dream of being a homeowner. Getting a home loan essentially consists of three important stages – application, sanction, and disbursement.

The disbursement is the last step in the home loan process. But what exact is disbursement? In simple words, it is the stage when the housing finance company where you apply for a loan pays the sanctioned amount to the builder or the property seller as per the agreed loan terms.

Let us look at the home loan disbursement process in detail

The financial organisations disburse the home loan amount after the following three important steps or processes are completed.

1.The lender has fully verified the construction of the property and is technical appraised

2.You have submitted all the necessary property-related documents to the lender, and they have verified the authenticity of the same

3.You have paid the down payment. Generally, the lenders sanction only up to 80% of the property’s value as loan and you must pay the remaining 20% from your pocket. This is called down payment.

After you have reviewed the loan terms mentioned in the sanction letter, you must sign the same and submit back to the lender, which is treated as your acceptance of the same. Once you accept the offer, you can request the lender to proceed with the disbursement.

The best way to request disbursement is online wherein you can visit the lender’s website or log into the housing finance company’s home loan portal with your loan account number and password. Next, click on the disbursement request tab and upload the proof of down payment.

You may also be required to update the status of the property, i.e., whether it is an under-construction property or a ready-to-move-in one. If you avail home loan for an under-construction property, you must mention the details of the current stage of construction and upload relevant documents such as the demand letter issued by the builder or developer.

If you are buying a ready flat, you just must mention the demand letter date and details of the bank account where you want to receive the amount.

While you give your acceptance on the sanction letter, it would be advisable to know the approved amount and the repayment tenure. You can use an EMI calculator to know the exact EMI you must pay every month and you can make a more informed buying decision. If you think the EMI is too hard for you to afford, you can negotiate with the lender to revise the tenure or even perhaps borrow less.

Stage of home loan disbursement

The loan disbursement either happens in a single payment or in part payments depending on the stage of the construction of the property. The lenders clearly mention the disbursement schedule in the loan agreement.

The lenders disburse the amount only based on the construction stage and not only the payment timeline issued by the building. In case of part disbursement, you may have to repay only the interest on the disbursed amount and the regular EMIs begin only after full disbursement.

In case of full disbursement in lump sum, the repayment period begins from the following month, and you must pay the EMI till end of the loan term.