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Congratulations on receiving the Sanction Letter from your Home Loan provider. But, what happens next? How is the loan disbursed? Read this post and learn more.

The process of acquiring a housing loan in India is divided into stages. Application, documentation, approval, property verification, valuation, and disbursal, each stage involves a few different steps. For instance, loan approval is followed by the Home Loan disbursement process.

At this stage, the lender pays out the loan amount to the builder or to the seller on behalf of the borrower, to purchase the property. If you’ve already got your Home Loan approved and received the Sanction Letter, understanding the disbursement process in detail can help avoid confusion, errors, and delays.

Here are the different steps involved in the disbursement process:

1. Property Evaluation and Document Submission

Once the loan is approved, a technician appointed by the lender will visit the property for evaluation. If the property is already constructed, maintenance related matters, age of the property, and its surrounding areas will be inspected. For under-construction properties, the quality of construction and its current stages are noted. The technician then submits the evaluation report to the lender.

After a successful evaluation, the borrower must submit the original property documents, like the Title deed, Allotment Letter, stamped Agreement of Sale, and the NOC. The legal counsel of the lender will also examine these documents. Your property documents work as collateral or security against your Home Loan, and will remain with the lender until the loan is fully repaid.

2. Execution of Power of Attorney (POA) for Home Loan Disbursement (Applicable for NRI/OCI customers only)

The Power of Attorney (POA) document is required to be executed before Home Loan disbursement only. It is executed to authorise an individual (family/relative/friend) to process the disbursement on behalf of all NRI applicant/s. This is applicable when all the NRI applicant/s are not physically present in India at the time of disbursement. In case all the NRI applicant/s are physically present in India during disbursement, the NRI applicant/s may choose not to execute the POA document.

The POA must be executed* in ICICI Bank’s prescribed format only, either through the Indian Embassy or notarised through the Notary Officer appointed at the overseas country of residence of the NRI applicant/s. The original executed POA document must be further notarised/adjudicated in India on a non-judicial stamp paper of an appropriate value, as applicable in the State where it is executed, and duly notarised along with the Attorney Holder’s signature. The photograph of the POA holder must be pasted on the POA document and must be attested by all NRI applicant/s for the loan.

To download the POA format click here

*In GCC countries, the POA must be executed through the Indian Embassy only.

3. Submit the down-payment proof

As per guidelines, the LTV or Loan to Value ratio is generally between 70% and 90% of the cost of property and the lender approves the loan within this ratio. What you pay is the balance amount as down payment to the builder/seller. If you’ve made the down payment to the builder or seller, you’ll be required to submit a proof of payment or an ‘own contribution receipt’ to the lender, to proceed with the next step of the Home Loan process.

The payment proof can either be your net banking transaction details, in case of an online payment, or a copy of the payment cheque or bank statement, if the payment has been made offline.

4. Request for disbursement

After providing the down-payment and submitting the proof, the disbursement of the loan will be sanctioned only after you submit all the required documents (Loan Agreement, original property documents, repayment mode etc.). For availing disbursement, you can visit the nearest branch office of the lender or contact your relationship manager.

Disbursement stages for under-construction property

If the property is already constructed, the entire loan amount can be released by the loan provider. However, if it is an under-construction property, the funds will be released in parts, adhering to the stages of construction.

The builder generally sends a notification to the buyer with details of the progress in the construction of the property. A Demand Letter is sent after the completion of each stage. As per the demand received from the builder, you request your lender for subsequent disbursement. Basis the demand received, your chosen lender will release the funds in proportion to the progress of construction.

Ready to be a homeowner?

You only become a homeowner, after the completion of the the Home Loan disbursement process, end-to-end. While the process involves several stages, it is certainly worth your time and effort to gift yourself a home, being an important life goal.

Moreover, with the introduction of online Home Loan application, documentation, and disbursal, the entire process is no longer as time-consuming or complex as it used to be. Choose a reputed lender to ensure that you can receive all the assistance you need at every step of this important journey.

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