What happens in the Home Loan disbursement process, after approval?

Having a safe and secure shelter over our head, a place you can go to at the end of a hectic office day. Settle down peacefully is something we all look forward to. Acquiring a home loan is just your way to fulfil that dream of buying or making a home. Also, home loans are a really smart way of investing in some tangible capital asset. That will yield you both on and off-market values in the long run. To buy the correct home you also need to look at the various home loan offers available. Make the correct decision for yourself. As such choosing the correct home loan plan can be a bit of a big deal. Further, once you’ve taken the loan, the process doesn’t end here since you need to have sufficient financial planning. Backing to repay your debts otherwise the loan may turn into a financial liability. 

Understanding the process of home loan disbursement is quite important. In case you need to acquire one for diversifying your future portfolio of assets.

Home Loan disbursement process after approval

Before going for investment in any home loan, you need to thoroughly go through each of the offers available in the market. Making a proper well -informed decision that accurately reflects your financial planning in the future. That you can easily fulfil without necessarily worsening your account balance is quite important. Most home loans usually give you sufficient time to meet both the principal and interest amounts in the long term. But bigger amounts come with bigger liabilities and the need for sufficient collateral. So, the terms and conditions should be well-known and well-analysed before applying for any home loan.

To acquire a home loan, first, you need to apply for one at your preferred bank or any other home loan provider. Check out their list of requirements and then wait for the bank’s approval. Once the manager gives his nod to your application for the loan, there comes the disbursement process. 

Property evaluation & document submission

Here a bank appointed technical or expert in real estate would visit your plot or home. Before sanctioning the loan to estimate the future value of the asset. If the property is already complete and not under construction. He will take note of the maintenance, age of the property and the locality and assume the valuation accordingly. If the plot is under construction. Then other factors like the quality of construction, current stages of development will be assessed to place a figure. 

Once the assessment is complete and reported accordingly to the lender, the customer has to submit all legal documents of the collateral. He’s willing to safekeep at the bank which will remain with the latter until and unless the loan is fully repaid by the due date. 

In case your property evaluation reports don’t match up to the estimated payment of the principal plus the interest amount you have listed for the loan, the application may get denied or put on a pause. You have to come up with other collateral and then complete the process all over again.

Submission of down payment proof

Usually loans will be approved if the LTV or Loan to Value ratio remains between 70% and 90% of the actual cost of the property. But before sanctioning the loan, one needs to pay some principal amount. The proof of this down payment, legal documentation is required to produce before the bank to get your loan approved. It can be either a receipt of the transaction or a copy of the cheque or bank statement. Anything to guarantee that the transaction is actually taking place and not a hearsay one.

Request for disbursement

For these you need to submit the documents all in their original signed forms like original property documents, loan agreement, repayment mode, etc. For under-construction property, the builder has to notify the bank. About the details of the property in which you are looking to invest and the progress of the same. So the bank can also verify the progress and release its loan in phases instead of just giving away all of the sum at once. 

Some aspects of the loan application reviewing process and the loan disbursement process may differ from one bank to another. Nonetheless, the basics remain the same. We hope this article helps you carefully screen through the available home loans in the market and understand the process of loan disbursement a little bit better.


Sakshi is a Financial Advisor who helps people with investments and help them to get more out of their investment.

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