Home Loan Disbursement : The most feasible way of owning a house is when you have to apply for a home loan. A home loan bears lower interest rates compared with other loans and long tenures, making the former a highly sought after home loan product. It all starts with the process of applying for a home loan, then submitting necessary documents, followed by verification and approval before disbursement. Let’s get into the details of the home loan disbursement process to understand it better.
What is Home Loan Disbursement?
Home loan disbursement refers to the process where the sanctioned loan amount is transferred to the borrower by the lender. This process usually consists of three main stages:
- Submission of the application form and required documents.
- Approval and sanctioning of the loan.
- Disbursement of the loan amount as outlined in the disbursement letter.
The disbursement letter also includes a detailed schedule of the disbursed amount and associated terms.
Pro Tip: Use a Home Loan Eligibility Calculator to calculate your eligible amount and a Home Loan EMI Calculator to plan your monthly repayments efficiently.
Stages of Home Loan Disbursement
1. Filling Out the Home Loan Application Form
The first step in availing of a home loan is completing the application form. You need to provide details about:
- Personal information.
- Income and employment details.
- Existing liabilities.
- Property details.
Most lenders offer both online and offline methods for completing this step.
2. Submission of Application and Required Documents
Once the application form is filled, attach the required documents and submit them to the lender. Commonly required documents include:
- Identity Proof: PAN Card, Aadhaar Card, Passport, Driving License.
- Address Proof: Aadhaar Card, Passport, Utility Bills.
- Income Proof: Salary Slips, Bank Statements, Income Tax Returns.
- Property Documents: Approved building plan, NOC from society/builder.
Each lender may have additional or slightly different documentation requirements.
3. Payment of Processing Fees
A processing fee needs to be paid to start the application for a home loan. It is generally between 0.50% to 2% of the amount sanctioned in the loan, and is non-refundable. The fee might be waived by certain lenders under some conditions.
4. Discussion with the Lender
Once you submit the application, the lender checks your details and then checks your repayment capacity. You could be asked for a face-to-face interaction during this stage to provide additional clarity.
5. Verification
The lender validates the information provided in your application, including your:
- Credit score and credit history.
- Employment and income details.
- Property documents.
Bank representatives might visit your home or workplace for verification purposes.
6. Loan Approval
Once verification is complete, the lender issues a sanction letter detailing:
- Sanctioned loan amount.
- Interest rate and type (Fixed/Variable/Hybrid).
- Repayment tenure and schedule.
- Terms and conditions.
Review the sanction letter carefully and sign it to proceed further.
7. Property Verification and Legal Scrutiny
Before disbursing the loan, the lender evaluates the property’s legal and technical aspects. You’ll need to submit original property documents such as:
- Title deed.
- Encumbrance certificate.
- NOC from the society or builder.
For under-construction properties, the lender inspects the construction progress and quality.
8. Disbursement of the Loan Amount
Once all requirements are fulfilled, the lender disburses the loan amount as per the mutually agreed terms. The disbursement may be done in:
- Single Instalment: For ready-to-move properties.
- Multiple Instalments: For under-construction properties, based on the construction progress.
Home Loan Disbursement Process by Leading Banks
HDFC Home Loan
- Ascertain value of property.
- Final documentation.
- Pay down payment.
- Apply for online or offline disbursement.
- The loan is disbursed in a single or multiple instalments; pre-EMI interest is applicable until full disbursement.
ICICI Bank Home Loan
- Application and documents submitted.
- Issuance of sanction letter along with property valuation.
- E-stamping and agreements finalized.
- Loan disbursed according to the agreement.
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SBI Home Loan
Submit documents and create a mortgage.
Temporary security, if required.
Loan disbursed in a single or multiple instalments.
Axis Bank Home Loan
- Submits documents and completes verifications.
- Property valuation gets done.
- Loan is dispersed after the approval process.
DHFL Home Loan
DHFL Home Loan
- Analyze through income and Credit report
- Issue Conditional sanction letter
- Technical and legal property check and
- Verification successful. Hence, disperse the Loan.
Braj Verma is a resident of Rajgarh in Madhya Pradesh and is a content writer and freelancer by profession. He has a degree in Political Science from Barkatullah University, Bhopal. He has expertise in subjects like credit cards, banking, loan, insurance, political analysis and digital marketing.