Everything You Want to Know About Home Loan Sanctioning and Disbursement Process

Applying for a home loan involves certain processes. When you fill the application form, the lender then begins the sanctioning procedure, and finally, the disbursement happens. Read on to know more about the sanctioning and disbursement process.

The home loan process involves three steps – application, sanction, and disbursement. Once you submit the application form, the lenders then review it, and if you meet all the eligibility criteria, they give their approval. After the approval process is completed, the lenders then conduct a verification of the property you wish to buy and the documents you submit before finally disbursing the amount. Let us understand more about the sanctioning and disbursement process.

Sanctioning Process

The sanctioning process can be quick and straightforward if you submit all the necessary documents, and they are genuine. During the sanctioning process, the lenders determine the maximum amount they can approve, and there are several factors they consider, including:

  • Your age
  • Income
  • Qualification
  • Profession
  • Stability of job
  • Ability to repay the amount
  • Credit score

Apart from the above factors, the lenders also check if you have any other ongoing debt and the payment history of your previous debts or credit card bills. You must know that sometimes, the amount sanctioned by the lender can be lower than what you applied for, and it is at the discretion of the lender.

If the lender is happy about the documents and your repayment capacity, they send a confirmation letter. It is proof that you are eligible for the loan. You must then accept or decline the offer. If you accept the offer, the disbursement process begins.

Disbursement Process

After you sign and submit the sanction letter. The lender will ask you to provide the property-related documents.

After you provide all the necessary documents, the legal team of the lender inspects the documents to validate its authenticity and to check if the property that you wish to buy is legal. This process may take some time, but it is a critical step as you to get an assurance that the property is clear of all legal titles. After the verification is done, the legal team submits a report to proceed further. The report also contains details of any additional documents required to disburse the loan. You must provide the documents mentioned in the report.

Just like legal verification of the documents, the lenders’ technical team conducts a physical inspection of the property to evaluate the exact value of the property.

Finally, after verifying the documents and the property, the lender disburses the approved loan amount in a single instalment or according to the terms and conditions mentioned in the loan document. Usually, most lenders disburse the loan directly to the builder/developer.

After the amount is disbursed, the repayment period begins, and you must ensure that you repay the EMIs on the due date consistently throughout the tenure. It is advisable to use a home loan emi calculator to determine the maximum EMI you can afford to pay. If you fail to repay a single EMI or if the repayment is delayed even by one day, it will have an adverse effect on your credit score, which will further dent your chances of getting a loan in the future.


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