Owning a home is a dream come true for many, and with affordable home loans, it’s easier to make that dream a reality. So if you’re planning to apply for a home loan, we’ve got you covered.
Our step-by-step guide will help you understand the entire home loan disbursement process. Let’s get started!
What is the Disbursement of a Home Loan?
Home loan disbursement refers to the stage when the lender releases the sanctioned loan amount to the borrower. Home loan disbursement process is the final step and marks the closure of the process of obtaining a home loan.
Before disbursement, the lending institution conducts a thorough review of all submitted documents, including income proofs, property papers, and legal clearances. It also involves a detailed technical and legal evaluation of the property to ensure everything is in order.
In short, home loan disbursement means the lender is ready to fund your property purchase after all necessary verifications are complete. Any discrepancy or missing paperwork can delay the process, which is why it’s essential to understand each step in advance.
Stages Before Disbursement of Home Loan
With the increasing use of technology in the banking industry, applying for a home loan is a breeze. To apply for a home loan, you can do it online. For this, you need to visit the lender’s website and follow the below-given steps:
Stage 1: Fill out the application form
Filling out the home loan application form is the first step when applying for a home loan. In this, you must furnish your personal details and details about your income, employment, existing liabilities, property etc.
It will hardly take 10 to 15 minutes to complete the form.
Stage 2: Submit documents
The next step in the home loan disbursement process includes submitting the documents mentioned in the form. You need to upload self-attested copies of documents needed for housing loan.
Age proof
Photo identity proof
Address proof
Income proof
Existing loan details
Property documents
You can submit these documents online or offline. Some lenders provide doorstep service if you do not want to do that either. Their executive will pick up your home loan documents from your house or office.
Stage 3: Verification
It’s the most critical stage in the disbursement process of a home loan. After receiving your documents, the lender will initiate a verification process. They will verify the documents submitted and your other details to validate the information provided by you in the home loan application.
At this stage only, the lender decides your eligible amount based on your repayment capacity. After successfully verifying your documents, the lender sanctions your home loan amount.
Once your lender is satisfied, you can rest easy and wait for your loan approval. Next, we move into the final stage of getting your hands on your loan amount: the home loan disbursement process.
Step-by-Step Guide on Home Loan Disbursement Process
Stage 1: Request for disbursement
The first step in the home loan disbursement stage is to request loan disbursement with the financial institution. You may have to arrange for documentation depending on the type of property. Some documents include Sale Agreement, Encumbrance Certificate, NOC from Builder, Property Chain, Registration etc.
Stage 2: Processing the final loan amount
They will conduct a legal check on the property to ensure its title is clear and indisputable. They can also conduct the technical valuation of the property. Then, depending upon the evaluation, the verification of the necessary documents, the deposit of the home loan processing fee, and the requisite signatures by all parties, the final loan amount will be processed and disbursed.
Once your documents are verified, you’ll receive a sanction letter. It will include the following details:
Sanctioned amount of the loan
Applicable interest rate
Type of rate of interest
Repayment tenure
Mode of repayment
Terms & conditions, and policies of home loan
Read the letter carefully. Once you sign it and send it to the lender, they will conduct a legal check on the property to ensure its title is clear and indisputable. They will also conduct a technical evaluation of the property.
After the requisite parties have signed the letter and proper verification is done, the final loan amount will be processed and disbursed.
Stage 3: Final disbursement
This is the last home loan disbursement stage. Once completed, the lender will issue a formal agreement and disburse the home loan proceeds per the agreed-upon conditions. Your bank account will reflect the home loan amount within 3 to 5 working days.
However, remember that it could be a total or partial disbursement. Of course, that depends upon the actual stage of construction of your property.
Factors Affecting Home Loan Disbursement
1. Type of Property
The nature of the property—whether it’s ready-to-move-in or under construction—directly impacts the disbursement process. If the property is under construction, the disbursement process is usually undertaken in phases. For properties that are fully constructed, the loan amount is usually disbursed in one go.
2. Lender’s Policies
Each lender follows its own internal policies when it comes to home loan disbursement process. These policies may vary in terms of documentation requirements, disbursement timelines, and approval conditions. It’s important to understand your lender’s specific terms before proceeding.
3. Agreement with the builder
For properties under construction, the disbursement schedule is often linked to the construction timeline agreed upon with the builder. Milestone-based disbursal ensures funds are released in accordance with the progress of the project.
Maximum Disbursement Claim
When applying for a home loan, understanding the maximum disbursement claim is crucial. This refers to the highest loan amount a lender is willing to disburse based on your financial profile and the property’s value.
Typically, lenders finance a significant portion of the property’s cost, while the borrower contributes the remaining amount as a down payment. Most borrowers pay 10-30% of the property’s value as down payment, financing the remaining amount.
Factors Influencing Maximum Disbursement
Income Level: Your annual income plays a pivotal role. Higher income can lead to a higher loan amount being sanctioned.
Property Value: The loan amount is often a percentage of the property’s market value.
Credit Score: A strong credit history can enhance your eligibility for a higher loan amount.
Existing Liabilities: Current debts can impact the loan amount you’re eligible for.
Estimated Maximum Disbursement Based on Income
Annual Income Range (Rs.)
Maximum Disbursement Claim (Rs.)
10-12 lakhs
50-60 lakhs
12-15 lakhs
60-70 lakhs
15-70 lakhs
80-90 lakhs
Note: These figures are indicative. Actual loan amounts may vary based on individual profiles and lender policies.
Home Loan Disbursement Eligibility Criteria
Tata Capital offers home loans with simple eligibility criteria and a hassle-free application process. Review our home loan disbursement eligibility criteria below:
Age: Applicants between 21–65 years of age are eligible.
Income: Applicants must demonstrate a stable income history.
Employment Profiles: Salaried and self-employed individuals are eligible.
Credit Health: Applicants with good credit scores are likely to enjoy favourable loan terms with smooth approvals.
Important Documents Required for Disbursement
The following documents are required for home loan approval:
Identity proof/KYC documents
Proof of residence
Salary slips and bank statements
ITR
Property documents or sales deed
Conclusion
If you’re looking for a home loan, Tata Capital offers a swift disbursal process with competitive interest rates. To make things even more convenient, you can use our home loan EMI calculator to get an idea of how much you’re eligible for and calculate the monthly repayment amount in advance.
Disbursement refers to the release of funds by a lender to a borrower.
What are the different types of disbursement?
Home loan disbursement types typically include full disbursement (one-time), partial disbursement (in stages), advance disbursement (before construction), and milestone-based disbursement (repayment starts on partially disbursed amounts)
How does disbursement apply to home loans?
In home loans, disbursement refers to the process where the lender releases the sanctioned loan amount based on property status and completion of documentation.
29 April 2025
7 mins read
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