How Does Home Loan Disbursement Process Work?
By Anupama Deshpande | September 12, 2019

When you apply for a home loan, the lender does the loan approval process at its end. When the lender has checked the documentation submitted by you and has also made some credential verification like all the personal information provided by you is correct, it sanctions the loan amount. Sometimes the lender can even call you for a face to face interview before sanctioning of the loan. Then it issues a sanction letter to you mentioning the sanctioned amount. A sanction letter carries the total amount that a home loan borrower can avail, repayment tenure, interest rate and its type. This sanction letter has a validity period, usually 6 months.

In simple words, Home Loan disbursement is the credit of the sanctioned loan amount in the borrower's bank account.

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It is not necessary that once the amount is sanctioned, it has to be disbursed. If the lenders seeks more details, it may call for the same.

Outlined below is the details as to how does home loan disbursement process work?

After finalizing the property & getting the sanction letter, the borrower has to submit property documents and any other documents required to the lender for disbursement of loan. You will get your home loan documents from the lender which you need to fill, sign and submit. You will be asked to submit your property documents at this stage. When you buy the property from a developer, you have to submit sanction letter, encumbrance certificate, cost description, etc. When you buy the property from a resale market, you need to submit owner details, title documents of the property chain, layout, etc. You need to pay processing fee.

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Down Payment is a fraction of the value of your home that you have to pay on your own i.e. out of your own pocket and rest of the funds are being made from the home loan that you have availed. Before you the disbursement of the loan amount, you are required to pay around 15% to 25% of the total cost of the house as down payment. This differs from lender to lender.

The lender will ask for a legal documents of the property documents that you have provided, i.e. No Objection Certificate (NOC) and Title Deed. After that the lender accepts your request for a loan and disburses the funds. Funds are generally disbursed through an online NEFT transfer or a cheque/ demand draft can also be given which the borrower needs to collect physically.

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The disbursed amount may not always be the same as the applied or sanctioned amount but will largely depend on the loan agreement, property value, tenure, type of loan and other such factors. After the home loan is disbursed, the lender hand overs you a welcome kit containing rate of interest, type of interest, loan tenure, loan disbursed, copy of loan agreement, EMI payment schedule and amortization table.

If you need the loan amount in a faster manner, you need to apply for a home loan online. Online loans are much convenient to the borrowers as well as faster in disbursal.