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Understanding Home Loan Sanctioning and Disbursement Process

Comments(26) Sub Category:Home loan Posted On: May 21, 2010

Home Loan is a buzz word for property buyers, real estate experts and investors. Before you apply for home loan you need to conduct some market research and choose lending company that offers best deal for buying your dream home or property. If the dream property is out of your budget now, consider a smaller property in the same area or moving into a cheaper locality. Once you have an idea about your eligibility and have selected the property, the next step is to apply for the home loan.

Home Loan involves three important process or steps. First process or step for home loan is submitting duly filed application form along with necessary documents. Second and third process Sanction and Disbursement are the two main steps for availing a home loan.

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Sanction of Home Loan

Based on various parameters and documents submitted, bank will evaluate the loan application. The bank checks all your information including your existing residential address, your place of employment, employer credentials, residence and work telephone numbers. Representatives are sent to your workplace or residence to verify the details. If the bank is not convinced about your credentials, your application may get rejected. If it is satisfied, it sanctions your loan. Once the loan is sanctioned, the banks sends you an offer letter mentioning the details of your Home Loan such as Loan amount, Tenure of the loan, General terms and conditions of the loan, Rate of Interest  etc. If you agree with what is mentioned in the offer letter from the bank, you will have to sign a duplicate letter of the same for the bank’s records.

Disbursement of Home Loan

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An innovative financial institution may offer a more suitable loan package that suits your needs and their application process may be faster and hassle-free. Once you have identified the property that you want to buy, applied for Home Loan and your Home Loan is sanctioned, you will get an offer letter which you need to sign and submit back to your bank for the bank’s records. Following are important process or steps involved in the disbursement of Home Loan.

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  • Documents for the disbursement: Once you submitted duly signed duplicate letter of offer letter to the bank, based on the nature of the transaction (purchase from builder / resale etc.), the officer will inform you of the required property documents for the disbursement of the loan.
  • Lawyer’s report on Documents: Your documents relating to property such as Sale deed, No Objection Certificate, Own Contribution Receipt, etc. would be examined by an expert or lawyer.  The lawyer’s report either gives a go-ahead if documents are clear, or it may ask for a further set of documents.
  • Date and amount for down payment: Once bank or your financial institute receives advice from its lawyer that the legal process has been completed and the loan documents are in order, the officer will inform you the date and amount of the first installment or down payment you have to make.
  • Transaction documents: In addition to the property documents, you will be required to execute transaction documents including the Credit Facility Application Form and other documents required for disbursement of the facility.
  • Disbursement of Home Loan: The amount sanctioned is disbursed in one or more installments subject to legal & technical verification of the property and other terms and conditions mentioned in the sanction letter.

Every bank conducts a legal check on your documents to validate their authenticity. Banks are extremely careful about the property they plan to finance. As a buyer, it gives you confidence that your property has been inspected by experts and that you are buying an asset that is legally clear and technically sound.

Sometimes the bank may ask you to pay for the legal verification. However, most banks cover the costs in the upfront (processing) fee that you pay. Once all the above mentioned process, the borrower is entitled to take the money from the lender party. The EMI payments commences only after the entire sanctioned loan amount is drawn. Until such time, the customer is supposed to pay a simple interest

It is extremely important to take insurance coverage when you purchase a house. A Loan Officer can provide invaluable assistance, and clarify issues which you are unsure. It is recommended to contact as many banks or lending company as possible before you sign agreement for your Home Loan. Take the time to discuss your housing loan questions with a loan officer to get loan facility that best suits your needs.

If the dream property is out of your budget now, consider a smaller property in the same area or moving into a cheaper locality. Don’t just go by someone’s word. Take the promise offered on your home loan in writing or by mail. Try and get your lender to get a valuation done even before the sanction of the loan so that this does not come as a surprise later on. You must analyze whether your income will be able to support the EMI on your home loan or not.

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26 Responses to “Understanding Home Loan Sanctioning and Disbursement Process”

  1. swati says:

    I had given all documents to ——bank with processing fees cheque.
    But still there is no verification from bank & cheque is deposited.(processing fees)
    Pls. suggest me wht to do?

  2. ankur says:

    Before sentioned the loan bank clear my processing fee check. and reject my application.

    Kindly advice me. can i go in consumer court to get the return of my fees

    Ankur

  3. Keitel says:

    You managed to hit the nail upon the top as smartly as outlined out the whole thing in an informative way. Will likely be again to get more. Thank you!

  4. KarlEagan says:

    Hey I am for the first time visiting your website. I came across this board and found it really useful, it helped me out much.

  5. Bikramaditya says:

    I am facing one problem with Home loan , i have bought a property from KSFC, a state Gov Karnataka authority .

    COst is 50l i already paid 17 l to , i apllied for a home loan of 33l, loan is sanctioned as a DD, but the bank is not disbursing the money asking me to do the registration then only they will handover the DD ,

    Please sugegst wht to do here

  6. Lizbeth Fleeman says:

    I think this is among the most vital information for me. And i am glad reading your article. But want to remark on few general things, The site style is ideal, the articles is really excellent : D. Good job, cheers

  7. Nagraj says:

    Hi,

    Am taking home loan from Axis bank and they have told me that compound interest would be charged from the day I submit my Registration Agreement document with the bank and not from the day the Pay order is prepared. Is this correct? Where can I find the regulations on this?

    Thanks

  8. Sri says:

    I have booked an under-construction flat that will take 2-3 years to complete. Thus, payment is spread out in time. I expect my contribution to run for 1 year, and after that I will need to rely on home loan disbursements.

    Question: Do I apply for home loan *now*? Or do I apply when I am nearly done with my contribution (ie. after almost a year)?

  9. sumit says:

    I think this is among the most vital information for me. And i am glad reading your article. thankful sharing

  10. rita says:

    Can a Sanction letter for home loan be cancelled
    Rita

  11. Varsha says:

    Very Helpfull information………

  12. Thanks for sharing superb informations. Your web site is extremely cool. I am impressed by the details that you’ve got on this internet site. It reveals how nicely you understand this subject. Bookmarked this net web page, will come again for extra posts. You, my pal, ROCK! I discovered just the information I already searched everywhere and just could not come across.

  13. akshat says:

    i was granted a home loan amounting Rs. 2050000 by lichf & received sanctioned letter which clearly mentioned loan amount 2050000 & emi. LICHF ALSO dispersed Ist instalment to the builder (of Rs. 840000) but now I received a comunication from LICHF that your sanctioned amountwhich will be dispersed by the LICHF is Rs. 1680000 only because for the said project we loaned 70 percent of the property (while in the sanctioned letter lichf not only financed 80 percent of the flat value but also 80 percent of the registry charges). can they do that ? pl. guide.

  14. Auschwitz Birkenau says:

    I am joyful to come across so diverse helpful information in this case, we should have establish further more approaches regarding this.

  15. Sathish says:

    HI thanks for the information about a home loan. I need a small clarificaiton, Recently I applied for a Home Loan from SBI , The flat is still under construction stage it may take another months for the possession of the house , so I talk the bank manager

  16. HI thanks for the information about a home loan. I need a small clarificaiton, Recently I applied for a Home Loan from SBI , The flat is still under construction stage it may take another months for the possession of the house , so I tolk the bank manager says:

    HI thanks for the information about a home loan. I need a small clarificaiton, Recently I applied for a Home Loan from SBI , The flat is still under construction stage it may take another months for the possession of the house , so I tolk the bank manager

  17. Goods says:

    That may be the finish of this report. Right here you

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  21. Bhupendar says:

    Hi, i have taken Hoam loan from HDFC bank for an underconstruction property, i have sumited them original document of registration, stamp duty of home along with processing fees cheque & frankin charges, and bank has disbussed me first partial payment. Now bank is asking me to register loan as per new act of Maharastra goverment. Please advice am i suppose to pay …..

  22. ashish says:

    Can a financial institute disburse a loan without verifying legally order of the loan documents (search report) …??? Please explain, and if happened so what could be the step by the customer availing loan when on the same property, other financial institute has claimed lien over it..???? Please explain and guide genuinely.. Thanks

  23. Serena says:

    Hi there! This post couldn’t be written any better! Going through this article reminds me of my previous roommate! He always kept preaching about this. I most certainly will send this post to him. Fairly certain he’s going
    to have a good read. Thanks for sharing!

  24. vidya says:

    hi
    can home loan be sanctioned on pensioner account orelse already owned property docs ?

  25. De says:

    I blog frequently and I truly thank you for your content.
    This article has truly peaked my interest. I’m going to book mark your website and keep checking for new information about once per
    week. I subscribed to your RSS feed as well.

  26. subhash chandra giri says:

    i have taken loan from bank of baroda. bank has disbursed two loan installments. for next installment bank demanding interest of release installment. bank saying that he will disburse next installment after deposit of all due interest. is it possible?

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