All about Disbursal Process after Receiving Sanction Letter

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Once your loan is sanctioned by the bank and you have received the Sanction Letter, you are finally on your way to get your loan disbursed. Now, before the lender can pay the builder the loan amount, a few steps need to be completed. Let us go over them, in this blog.

Getting the Sanction Letter:

Once the bank has assessed your repayment capabilities, you are issued a Sanction Letter for a particular loan amount. The letter will have the terms and conditions decided by the bank, as well as information about you. Once you’re done with this first step, you can start your journey towards the disbursal of the full loan amount.

Property Verification by the Bank/Lender:

Once you have identified the property, the bank will assess the legal and technical aspects of the house for which the loan amount is being availed. Thereafter, everything from the quality of construction, transferring of property deeds, to environmental clearances are assessed and the approval is only granted by the bank once it verifies the relevant details. Since this process can take a while, most builders usually get the property identified and receive their letter of clearance from banks, making the process smoother for home-buyers. In fact, banks too have a data-base of properties that have received the clearance from them, and can be bought with a pre-sanctioned Home Loan from them.

Document Submission:

Depending on the property, different sets of documents have to be submitted by the borrower, before the disbursal process can start. Some of the necessary documents may include:

• Sales deed of the property
• Own Contribution Certificate from the builder
• Letter, charting the construction progress status
• No Objection Certificate from the builder.

The exact documentation required will vary based on the transaction type. You can find the extensive list of documents needed for your Sanction Letter on the ICICI Bank website, under ‘home-loan documentation’.

Disbursal Process:

After document submission and clearance, the loan amount is credited in favour of the builder/seller within 7-10 working days.

After the due diligence is complete, the disbursal of the loan amount can happen either in part, or in full price to the builder. A lot of borrowers prefer to have the loan disbursed to the builder in parts, depending upon the stage of completion of the real estate project. This lets them pay a smaller amount, in Pre-EMIs (EMIs on the amount disbursed and not the principal loan amount), until the construction of the house is completed.

Some borrowers prefer to get their loan disbursed in lump sum, so they can start paying off the EMIs on their principal amount and be debt-free sooner.

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