Home Loan Disbursal in India: Step-by-Step Guide to Get Your Money

A Complete Guide to Home Loan Disbursement from Approval to Execution

Introduction

Once your home loan is approved, you will be waiting for the cash to arrive in your account. The distribution is the final step in the home loan process and can be done in two ways: lump sum or installment. The type of home loan you take out will determine how much your home loan amount will be. There are enough applicants who get confused about home loans and home equity loans. They are not the same, they are different programs.

Home Loan Disbursement vs Home Loan Sanction

As we all know, home loan sanction is the beginning of the home loan process. The bank or NBFC approves the loan application of the borrower after verifying the applicant with the required documents and CIBIL score. It also checks the property, establishes legal title and binds the information. If all these are met, the lender approves the loan and gives a decision. Basically, the details of the situation will be included in the decision letter given by the real estate finance company.

Home Loan Payment

Stage 1: Property Evaluation and Documentation Verification

Once your home loan is approved, an expert will be sent to the house to conduct an assessment. The design of the building, location, age of the property, and nearby future plans will be assessed. When you apply for a loan for construction, building materials, construction etc. will be taken into consideration. The property documents include the permission letter, contract and NOC that will be given to your lender after completing the assessment. Their lawyers will also review your case. Your property information will serve the lender until you repay the loan in full.

Stage 2: Execution of POA

The power of attorney form needs to be signed before paying the home loan and is only applicable to NRI borrowers. Signing a power of attorney gives the borrower the right to appoint an agent to be responsible for the loan in the absence of the NRI. The insurance agent can be waived if the NRI is in the country.

Stage 3: Down payment receipt submission

A home loan is not the entire value of your home. If you have paid a builder-dealer, you will need to report this money to your lender. Proof of business can be a bank statement or a check. You will need to pay the loan once you have submitted all the documents. You can contact your lender and make the payment. 

1. Full Payment: For properties that are ready to move in or are being offered for resale, the loan is usually paid in full. This means that your EMI payments will start from the next month following the payment.

2. Partial Payment: If the property is under construction, a portion of the loan will be paid during the construction period. In this case, you have to pay the interest ‘pre-EMI’ up to the full payment, after which the regular EMI payments start. 

Repayment Schedule, Dates and Amount of Down Payment

Repayment Period: After you pay the loan amount, the lender will inform you about the repayment period. However, this is an expansion of the content of the decision in the penalty letter. This includes the EMI amount, payment start date and the total loan amount. You should do the analysis of the same to see if it fits into your financial plan. This is usually a portion of the sale price of the house and the rest is usually financed by a real estate finance company. Simply put, a down payment is your contribution to the property, usually between 10% and 20% of the property’s value. Of course, a well-informed lender should determine the payment amount and due date, and both parties should agree on the amount and due date prior to the loan.

Conclusion

When it comes to buying a home, the home loan process from approval to closing can be confusing. We need to understand what we should ask for, how the penalty works, and how we will make the payment. By planning carefully and paying your balance on time, you can stay in good financial shape and eventually achieve your dream of owning a home. To learn more about repayment options, visit our blog: https://www.indiashelter.in/blogs/home-loan-balance-transfer-factors-to-consider