InvestorQ : What is the sanctioning and disbursement of loan?
Neha Sharma made post

What is the sanctioning and disbursement of loan?

Deepali Khupte answered.
3 years ago

After you have applied for a loan, the bank or non-banking finance company (NBFC) goes through your documents and decides whether to provide you a loan or not. If they decide to give you a loan, it is called sanctioning of the loan.

The bank will decide how much loan it will sanction to you and you will also get a letterstating the details of the loan such as the loan amount, tenure and the interest rate, among other terms of the home loan. The stated terms will be valid till the date mentioned in that letter.

Once the loan has been sanctioned, the amount will be transferred in to your bank account and this process is called disbursement of your loan.

A bank disburses a loan in to your account after it has conducted its technical and legal exercises. You can opt for a lower loan amount during disbursement against what is mentioned in the sanction letter.

At the disbursal stage, you have to submit your allotment letter, photocopies of title deed and the agreement to sell papers.

Do note that the interest rate on the date of disbursement will apply, and not the one as per the sanction letter.