Home Loan Disbursement Process: Understand Step-by-Step Stages of Disbursement

Over the last few decades, Home Loans have become some of the most popular financial products. They have helped millions of people achieve their dreams of owning a home. Whether you want to buy an apartment in a high-rise building or build a duplex in your hometown, Home Loans can provide the funds needed to make this happen.

Getting a housing loan involves various steps, ultimately leading to Home Loan disbursement. It is the final stage at which your lender transfers the funds for your new home. It is vital that you understand each phase before applying for a loan.

When a Non-Banking Financial Company (NBFC) or bank processes the loan application you submitted and sanctions the loan amount, the amount is credited to your bank account. This process is called loan disbursement. After a Home Loan amount gets disbursed, you can use it for purchasing, constructing, or renovating your home.

A loan is usually sanctioned after the necessary documents are verified and the property is evaluated. Once sanctioned, you can initiate the Home Loan disbursement by submitting an online application or visiting a branch.

The disbursement of a Home Loan is a relatively quick process since all legal checks get completed by the time you reach this stage. Depending on the type of loan, the disbursement will either be in phases or as a lump sum. At Aditya Birla Capital, Home Loan disbursement takes a maximum period of 15 days.

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1. Filling out the application form

The first step involves filling out a loan application form from your preferred lender. The application usually gives the lender details about your employment status, existing loans, credit history, property owned and rented, and other information essential for a Home Loan. While most lenders provide an online form that you can fill up to start the process, you can also visit your lender's office for the same.

2. Submitting the application with relevant documents

While submitting your loan application, you would require five types of documents to initiate the Home Loan process.

Double-check the documents to ensure you have provided the correct ones, as missing paperwork could result in a longer processing time.

Note: Most financial institutions would require you to submit self-attested copies of the documents mentioned above.

3. Payment of processing fees

While applying for a housing loan, you have to pay a non-refundable processing fee, which can be as high as 2% of the loan amount. Some lenders, like Aditya Birla Capital, charge a mere 1% of the loan amount as processing fees.

4. Discussing the terms of the loan

This step is perhaps the most important for any borrower. After paying the processing fee, it might take some time for the lender to inform you whether you are eligible for the loan and the total Home Loan amount you can avail of. At this stage, you need to iron out the finer details of the loan, such as the repayment period, interest rate, etc. You should also gather information about the terms and conditions of the loan to ensure that it is suitable for your needs.

5. Verification of documents

Your lender will verify the documents you submitted with your Home Loan application. Although this step can take a few weeks, it should go through smoothly if your paperwork is in order.

6. Property verification and legal checks

The lender will have to conduct a few checks related to the property. This step involves verifying the property value and conducting legal checks on the property documents. These documents could include the buyer agreement, allotment letter, title deeds, payment receipt from the seller or sale agreement copy, which you must have provided at the time of application. The objective here is to ensure that the documents are legally indisputable.

The lender could also send a representative to evaluate the property and check factors like the location, quality of construction, age and condition to determine the property value.

7. Loan sanctioning

The next step in the Home Loan disbursement process involves the approval of the Home Loan and its sanctioning. If the Home Loan is approved, the lender will issue a sanction letter that should include the following:

• Loan amount

• Applicable interest rate and its type

• Tenure of loan

• Repayment structure

• Special scheme (if any)

• Other terms and conditions of the loan

Ensure you read all the terms mentioned in the sanction letter. If you are satisfied with the terms and conditions, you will have to sign and submit the sanction letter indicating you have accepted the loan. You may need to pay an administration fee at this stage.

8. Initiating the Home Loan disbursement process

Once all checks and verifications get completed and the lender is satisfied, you can initiate the Home Loan disbursement process with your bank or financial institution. There are two ways to do this:

• Online request: Log onto the website of the lending bank or financial institution. Navigate to the 'Home Loan' tab, ensure all dues are cleared, and complete the e-request form.

• Offline request: You can visit a branch of the lending bank or financial institution. Meet a Relationship Manager, fill out a Home Loan disbursement form and submit it.

9. Home Loan disbursement

After completing all the above steps, the Home Loan amount will get disbursed to you. The Home Loan disbursement process for an under-construction property involves the lender providing the funds in stages as and when the property is constructed. If your prospective home is already built, the funds will get transferred to you upon completing the loan disbursement process.

Generally, it does not take much time after approval for the Home Loan to get disbursed. Companies like Aditya Birla Capital tend to process Home Loan applications within 15 days, making the process more desirable to aspiring homeowners.

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• Various steps, such as submitting application form and documents and verifying property, lead to Home Loan disbursement.

• Prepare and submit all the necessary documents correctly to ensure a smooth disbursement process.

• Once the documents are verified, you can discuss the loan terms with your lender.

• The Home Loan disbursement commences once all the required checks and verifications are completed successfully.