Disbursement of Home Loan In Brief

What does the Disbursement of the home loan mean? It is the stage when the lender –bank or NBFC hands out the loan amount to the seller (if a property is for resale) or the builder (for a new property) according to the terms of the home loan agreement you have agreed to with the lender.

Well, there are three stages, submitting the application form and documents, the approval of the instant home loan and the disbursement of home loan. The disbursement of the loan is notified through a home loan disbursement letter which includes disbursement or paying schedule for your instant home loan.

Prior to applying for, it is advisable to use the home loan eligibility calculator to understand the amount that you will be eligible for and a home loan EMI calculator to know the amount to be repaid every month so that you can decide if it’s affordable or not. Once the home loan sanction letter is accepted, the disbursement process begins.

Home loan disbursement requirements:

• Documents: You have to give a signed copy of the offer letter and the property documents required for the disbursal of the home loan.
• Legal Examination of Documents: The property documents like own contribution receipt, no objection certificate (NOC) and sale deed is then checked by a legal authority. This clears the way for the process to go ahead or they might ask for more documents.
• Down Payment Amount and Date: The next stage is informing of the date for the down payment and the first installment to be paid.
• Verification of property: There is technical and legal verification of the property in compliance with the sanction letter’s terms and conditions.
• Disbursement of The Loan Amount: The loan amount will then be handed out in single or multiple installments. This last step of the loan process is the disbursement.

Disbursement process:

The bank of NBFC will disburse the loan amount on completion of the following steps:

• The property has been technically assessed
• All legal documentation is fulfilled
• You have made the down payment as intimated

You can then make your request for disbursement either offline or online. For the offline request, you will have to visit the office or branch of the lending company.

Whereas, for disbursement request online you will have to visit the website of the lending company, log in with your user ID or account number, go to the ‘disbursement request’, upload your ‘own contribution’ details (receipts) and update the status of the property (ready or under construction). For a property under-construction, mention the stage of construction and upload documents like the builder’s demand letter, architect’s certificate, etc. For ready property, just add the demand letter date. You will have to then add the payee accounts details (the builder for an under-construction property, or the seller for a resale property).

Disbursement stages

The loan is disbursed either in phases or completely depending on the phase of completion of construction. The disbursement schedule is mentioned in the loan agreement.

• The lender will consider only the construction stage and not any installment payment timelines stipulated by the builder.
• In case of complete disbursement, your EMI payments may start from the month following the month in which the full disbursement has been made(confirm the EMI schedule in the home loan agreement).
• In case of partial disbursement, you may need to pay ‘pre-EMI’ interest till full disbursement is made after which EMI payment

Disbursement of your instant home loan plays a key role in obtaining your dream home.

Additional Reading – Home Loans – Most Important Factors To Be Noted Before Applying for Loan

Check your maximum Home Loan eligibility