Understanding Home Loan Disbursement: A Simple Guide

In simple terms, disbursement refers to the process of releasing funds from your lender to you, the borrower. When it comes to a home loan, disbursement is the final stage where the lender transfers the loan amount to the seller, builder, or directly to you, depending on the arrangement.

If you have ever wondered about the disbursement meaning in the context of a home loan, it is essentially how the bank or lender releases the loan amount. But there is more to it than just handing over the money. The disbursement of your home loan is usually done in phases, depending on the type of property you are purchasing. Let us explore how it works.

Step-by-step process of loan disbursement

1. Loan sanction:
Before any disbursement takes place, your lender first needs to approve your loan application. This involves a thorough check of your financial background, credit score, income, and other factors. Once everything is in order, the lender issues a sanction letter. This letter confirms the amount of the loan, the interest rate, the tenure, and other details.

2. Property verification:
Once your loan is sanctioned, the lender verifies the property you are buying. This process involves checking legal documents like the title deed, no-objection certificates (NOCs), and building approvals. For under-construction properties, the lender ensures that the builder has the necessary approvals in place.

3. Disbursement request:
Once all verifications are complete, you, as the borrower, must submit a disbursement request to the lender. This step signals that you are ready for the loan amount to be released. In this request, you will mention the required amount, especially if the loan is being disbursed in stages (as with under-construction properties).

4. Partial or full disbursement:
Now, depending on the type of property you are buying, the lender will either disburse the loan in full or in parts.

• Full disbursement: If you are purchasing a ready-to-move-in house, the lender will release the entire loan amount in one go. This is because all legal work and property construction are complete.

• Partial disbursement: For an under-construction property, the lender will release funds based on the progress of the construction. This means that funds are disbursed in phases, such as when the foundation is complete, when the structure is built, and finally when the finishing touches are added.

Important documents for disbursement

To ensure a smooth disbursement process, you will need to provide the following documents:

• A copy of the loan sanction letter.

• Proof of down payment made to the seller or builder.

• Documents related to the property agreement.

• For under-construction properties, a letter from the builder confirming the construction stage.

These documents help the lender verify that everything is in place for the loan amount to be released.

Factors that influence loan disbursement

Several factors play a role in how and when your home loan is disbursed:

1. Type of property: As mentioned earlier, whether you are buying a ready-to-move-in property or an under-construction home affects whether your home loan disbursement happens all at once or in stages.

2. Stage of construction: For under-construction properties, the lender disburses funds in stages based on the progress of the construction. Each stage must be verified by the lender before they release further amounts.

3. Lender’s policies: Each lender has its own policies on home loan disbursements. Some may require more documentation than others, while some may disburse a higher percentage of the loan at each stage of construction.

4. Your agreement with the builder: In the case of under-construction homes, the builder will provide a timeline for construction. The lender disburses funds according to this timeline, so it is important that both the builder and lender are on the same page.

When does your EMI start?

Your EMI payments start only after the disbursement of your home loan. However, if your loan is being disbursed in stages (for an under-construction property), your EMI may start once the entire loan has been disbursed. Until then, you may have to pay pre-EMI interest. Pre-EMI interest is the interest charged on the disbursed amount until the full loan is released.

Explore Bajaj Housing Finance Home Loan

When choosing a lender for your home loan, it is important to pick one that offers convenience, long repayment period, low interest rates, and ease of access. Bajaj Housing Finance Home Loan ticks all these boxes and more. With easy disbursement options, quick approvals, and minimal documentation, Bajaj Housing Finance makes the home loan process stress-free. Whether you are buying a ready-to-move-in property or an under-construction home, we offer affordable interest rates and flexible repayment options to suit your needs. Here are a few benefits of opting for a home loan from us:

• High loan amount: Purchasing a home is a major life milestone. Achieve it with a substantial loan amount of up to Rs. 15 crore*.

• Low interest rates: With interest rates starting as low as 8.25%* p.a, you can pay EMIs as affordable as Rs. 741/lakh*.

• Fast approval: Get your loan approved within 48 Hours* of applying, and in some cases, even sooner.

• Flexible tenure: Repay your loan at your own pace with a long tenure of up to 32 years.

• No foreclosure charges: If you opt for a floating interest rate, you can foreclose or prepay your loan in part without incurring any additional fees.

• Simple application process: Skip multiple branch visits with our easy and convenient service, including doorstep document collection.

Ready to take the next step in buying your home? With Bajaj Housing Finance Home Loan, your dream home is within reach. Use our home loan EMI calculator to see your monthly payments and how affordable they are. Visit the Bajaj Finserv website, apply for a loan, and take control of your future. Your dream home is just one click away.