Today, applying for a home loan is convenient and straightforward. All you have to do is fill the online application form, upload your required documents, and hit the submit button.
If your lender approves your application, you will receive a sanction letter and get the loan amount credited to your account. This process is referred to as loan disbursement.
However, the process is not as simple as it sounds! Read on to learn more about the different home loan disbursement stages.
1. Loan sanction
Your lender asks for documents related to your income and the property you are purchasing. This is because lenders need to assess your home loan eligibility and verify the authenticity of your property before sanctioning your loan. If they find everything satisfactory, they will send you a sanction letter in a few weeks.
2. Sanction letter
Your sanction letter is a written document stating that your lender has approved your home loan. Typically, a sanction letter states the following:
- Your sanctioned amount
- Repayment mode
- The applicable home loan interest rate
- Type of interest rate, fixed or floating.
- Special schemes, if any, depending on your lender
- Tax benefits
- Terms and conditions of your lender
Moreover, your sanction letter comes with a ‘valid until’ date, which is usually six months from the date of sanctioning.
Once you receive the sanction letter, go through it carefully. Then, sign and submit the acceptance copy of the letter to the lender. Some lenders might charge a small administrative fee for this process.
Nevertheless, make sure you send your signed copy well within the validity period. Once the validity period is over, you may have to go through the entire application process again.
Additional Read – Importance of Home Loan Sanction Letter
Disbursement is the final step in the loan process.
After you submit a signed copy of your home loan sanction letter, your lender will verify your property papers deeply. Moreover, a technical officer will examine the quality of construction, measure your property’s area, and note other details. A lawyer will recheck the authenticity of the property documents to ensure that it is not disputed.
Based on the results of this verification, your lender will evaluate the cost of your property. And finally, send you your loan agreement.
4. Loan agreement
Your loan agreement states your loan terms and describes how your lender will disburse your loan. This is typically different for fully constructed and under-construction properties.
Most lenders disburse the entire loan amount for fully-constructed properties. In this case, you will have to pay a fixed EMI, which you can evaluate in advance using a home loan EMI calculator.
For under-construction properties, however, your lender may disburse your loan amount in instalments. They will notify you each time they credit the amount to your account. In this case, the EMIs are proportional to the total loan disbursed.
Additional Read – How to Get Home Loan in India – Get Detailed Information Now
Since there are various steps involved in the loan disbursement process, you must be careful throughout. Read all the fine print and reach out to your lender in case of any queries.
If you want to apply for a home loan, Tata Capital is here for you. We provide loans at affordable interest rates and offer flexible repayment options. Visit our website today!