Home Loan Sanctioning and Disbursement Process


Based on my recent experience I am sharing my home loan application process.
Home loan can be a intimidating and laborious task if not planned well. Once you have selected the property, start preparing how to finance the House/Flat. You will be undergoing the following documentation process:images
Application Form
Processing Fees
Documents Requirement
Personal Discussion
Investigation verification
Sanctioning of Loan
Acceptance of Loan
Disbursement of Loan
Below is the step by step procedure for getting the home loan sanction and disbursed. Do keep in mind that Loan sanction and loan disbursement are two different processes.

Application Form:
It is the 1st document which bank will be using as base for sanctioning the loan. It generally includes your personal information, contact details, property details, total (various)costs involved in buying property, loan amount required, your income details, tenure required. The application has to be accompanied with Processing fee check, read on.
Processing Fees:
As you will be given a Loan Application Form, you will be asked to deposit a processing fees along with filled Application form and documents. This processing fees varies from bank to bank. (Tip negotiable to wave this fees.)

Caution: Please check with your bank that up to when(Time Frame) the processing fees is valid, based on your final disbursement of loan is scheduled to happen after the validity, (Generally it’s the case with new/under constructed projects/societies) then its possible that to disburse the loan amount you have to give the processing fee again to banks to get loan disbursed.

Based on the loan application you have to submit the documents as per our page Documents required for Home Loan.

Personal discussion:
This will happen more or less on the same day/simultaneously when you submit your documents. Bank will try to probe the reason for buying the property. Try to divert the discussion towards your qualification so that with age/time your income will grow and you could pay more EMI. Bank also tries to verify during the discussion that, the mentioned items in the application form are correct. These days this activity has become the primary activity once you meet the bank official.

Investigation verification
Many people do apply for home loan. Many are not even eligible for same. In order to check this, banks verify you personally. They try to visit your company’s office and meet you personally in office. Often they visit your residence as well. No harm, cooperate fully in this activity. This will bank increase surveyor confidence on you rather

Loan sanctioning/Loan sanctioning letter:
After the above few steps the bank will give you the loan sanctioning letter. It has the details of the amount of loan sanctioned by bank. Final loan amount sanctioned and your loan eligibility are two different things. Once you know what you are eligible to get, you can decide on the loan amount. Just because you are eligible for a huge sum does not mean you should borrow heavily. The loan sanctioning letter is an important document, keep it safe, may be useful if there is any dispute.

what are all the points you need to check in the letter?
• Loan sanctioned amount
• Interest rates (Fixed or floating and related to which reference rate e.g. Base Rate)
• Tenure of Loan
• EMI Amount, mode of payment (Cheque or ECS)
• Conditions/Charges on prepayment of loan
• Special scheme if any available.
• Validity of the Loan sanctioning letter (Generally 6 months)
• Any other terms and conditions.(Read carefully into the fine print)

Acceptance of Sanction Letter:
If agreed to all the conditions of the loan, return the same by signing on the letter (duplicate copy) to Bank.
Note 1: If there is any thing missing or Interest rate on the letter is the same that was discussed and agreed upon, If no, bring this to Bank’s notice.

Note2: Loan sanctioning and loan disbursement are 2 different process.
You can get 2 crore sanctioned but may not be able to disburse same because of improper papers of property. Bank will sanction loan by seeing your credit worthiness/ability to repay, but will disburse the loan by seeing your property and its appropriate papers. Once you sanction the loan, immediately start collecting original property papers, as without them you can’t get the loan disbursed.

Loan disbursement/Property Assessment: Once you get the loan sanctioned now you have to get the loan disbursed. For disbursing the loan you have to submit all the property papers, payment receipts in original to bank which will be kept as security for loan amount given to you. All the papers will be kept by bank till the loan is fully repaid. Bank will do the following with the papers.

a. Legal Check:
Every bank conducts a legal check on your documents to validate their authenticity. Hence, Sometimes it helps to buy property from a reputed developer since they know the process inside out, and keep all the documents upfront.

•Home loan is also the cheapest way to get the property assessed by an individual as Property documentation in India is still non-transparent.

•Thus home loan assures that the property you are buying has all the legal titles clear, and your investment is safe.

b. Technical check:
Banks take utmost care in their plan to finance the property. They send an expert to visit the premises you intend to purchase.

In case of under construction property
• Stage of construction is the same as that mentioned in the demand given to you by the builder.
• Quality of construction and Satisfactory progress of work.
• Layout of flats and property is within permissions granted by the governing authority.
• The builder has the requisite certificates to start construction at the site.
• Valuation of the property in relation to other deals in the surrounding areas.

In case of ready/resale construction

• External / internal maintenance of the property.
• The age of the building.
• Quality of construction.
• Surrounding area (development).
• Whether the builder has received the requisite certificates for handing over possession of the flat.
• There is no existing lien or mortgage on the property.
• Valuation of the property in relation to other deals in the surrounding areas.
• These inspections are carried out to protect consumer interests in terms of construction quality, adherence to local laws, approved building plans, etc. A technical inspection also lets the bank understand the progress of construction so as to release the staggered disbursements.

• Signing the home loan agreement: All borrowers need to sign the home loan agreement. The original property documents have to be handed over to the bank at this stage. Check the details of the agreement, and see that there are no hidden charges/conditions that may prove to be costly later.

Disbursement of loan: Now the big day has come where in you are now eligible for the loan disbursement to the builder, re seller (for resale flats), society or the development authority. But this will happen only if all the papers relating to the property are proper and as per bank requirement, All receipts of payments have been submitted in original and loan agreement have been executed.

Tip: Banks start charging interest on the loan amount from the day on which the cheque has been made and not from the day on which the cheque is handed over.
So, take delivery of the cheque the same day or the very next day to avoid paying extra interest on money. And get it encashed immediately, else you will be paying interest on the cheque amount.

Hope it will be helpful to you.

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