The simple home loan application process and flexible repayment schedule have made it easy for people to finance their dream home purchase, without draining their savings. However, many often get confused about certain aspects involved, for instance, the difference between home loan sanction and disbursement. The sanction letter guarantees loan approval provided all details are evaluated successfully. On the other hand, disbursement is the delivery of the amount from the bank account post any required validations. Read on to know the details.
Home Loan Sanction
After you submit the loan application, the lender reviews your application based on your home loan eligibility and documents. Once the lender is satisfied, a representative is assigned to check and verify your documents and property. The lender also checks information like residential address, employer details, contact details, CIBIL score etc. Once the lender has validated all your credentials, they sanction your loan. After the loan is sanctioned, the lender sends a confirmation letter mentioning your loan details. It contains the type of interest rate, loan amount, tenure, terms and conditions, etc. You can check the details and respond to the letter in affirmation or reject the offer. However, the letter is valid only for six months. If you fail to respond within the stipulated time, you might have to reapply for the loan.
Disbursement is the next and final step of availing a home loan. Once you have received the confirmation letter of the loan sanction, the lenders start the process of loan disbursement. The lender might disburse the whole amount in one instalment or divide it into several instalments. The stages of home loan disbursement are –
The lender can ask you for your transaction documents and property documents like sales deed, no objection certificate, etc. to release the disbursement. An expert, commissioned by the lender, would examine the documents. Once the expert validates the documents, the lender proceeds to the next step.
Once you submit the property documents, the lender inspects the technical and legal aspects of the property.
After the legal verification and submission of all the documents, the lender disburses the loan amount partially or entirely.
Difference between Home Loan Sanction and Disbursement
Home loan sanction is an assurance that your loan application is approved and you would get the loan amount after due processes. However, you might need to submit further documents, and the lender can do some checks and verification before they release the loan money. On the other hand, disbursement means the actual delivery of the loan amount in your bank account.
To reiterate, home loan sanction guarantees loan approval and will be followed by the disbursal process if property checks and other details are validated. Now that you know about the different steps of taking a home loan, apply for a home loan today and turn your dream of owning a house into reality.