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Understanding the Home Loan Disbursement Stages

Updated: Aug 28, 2022
Understanding the Home Loan Disbursement Stages

Buying one’s own house is the best investment for a successful financial life. Although we are aware that real estate is an expensive affair, it is considered to be one of the safest and best returning long-term investment strategies. To make purchasing real estate an achievable dream, provisions such as housing loans are provided.

What is a Home loan, and how does it work?

A home loan is an advance given by authorized lenders such as banks or NBFCs to the general public for purchasing a house. The lender usually provides up to a maximum of 90% of the value of the property. The remaining amount needs to be paid by the owner as a down payment.

The lender offers home loans based on the applicant’s fulfillment of the eligibility criteria, credit score, and the agreement of repayment of the loan. Your application will be approved once the lender is convinced of your ability to repay the loan amount.

There are different stages involved in the process of getting a home loan disbursement. Let us understand them briefly.

However, before we go any further, let us define the term loan disbursement. What is the disbursement of a home loan?

The disbursement of housing loans is usually classified into 3 stages –

  1. Loan application and documentation.
  2. Getting the loan sanction
  3. Disbursement of the loan

With the final approval, depending on the lender’s policy, a disbursement letter may be provided. The letter consists of the disbursement schedule in detail.

You can estimate your maximum eligibility amount, and also understand the repayment schedule beforehand with the help of useful tools such as the home loan eligibility calculator and the home loan EMI calculator respectively. What is the loan disbursement process?

Let us understand the step-by-step loan disbursal process. Please note that the process described below is generic. Depending on the lender’s process, the steps may vary slightly.

Application stage –

The initial stage in availing of a home loan is filling out an application form for the same. You need to fill in details related to your income, working status, external liabilities, property, and more. The form is available both offline and online at the lender bank's official website.

Document submission –

Once you fill out the home loan application form, you need to submit the same along with  documents as required. The documents need to be self-attested for authenticity. Some proofs that you may require are- PAN, identity, address, age, employment, income, banking as well as property documents. The requirements may differ from one lender to another.

Processing fees –

The loan process can begin only after payment of the home loan processing fee. The home loan processing fee is non-refundable. The fee varies between 0.5% and 2% of the loan amount. In some cases, the lender may agree to waive off this fee.

Lender-Borrower Interaction –

Once you submit the application form requisite documents and pay the processing fee, you may have to go through a waiting period for the lender to check your documents and verify your details. In some cases, the lender may even wish to interact with you to assess your repayment capacity of the loan.

Authentication –

At this stage, all the documents, and proofs you have provided to the lender will be verified. Representatives of the lender might visit your home and workplace for verification. Your credit score will also be carefully scrutinized.

Sanction Stage –

If you meet all the eligibility criteria, and come out satisfactory in the lender’s verification process, you will receive a sanction letter. The letter usually comprises the loan amount approved, interest rate applied, type of interest rate, repayment details, terms and conditions, and more. If you accept the said terms, a signed copy of the sanction letter – acceptance copy needs to be submitted. Administrative charges at this stage may be applicable.

Legalities fulfillment –

At this stage, the property is verified, and all legal documents are required to be submitted to the lender. A representative on behalf of the lender will visit the property, calculate its technical value, check its title deed, and more. If the property is under construction, the location, land, the stage, and quality will be scrutinized.

Home loan disbursement –

Finally, after fulfillment of the above stages, the funds will be disbursed as per the agreed upon schedule.


Home loan application can be an exciting step in your journey to make your dream home a reality. SMFG Grihashakti ensures that your home loan application process is smooth and hassle-free. Get a home loan at attractive interest rates along with minimum documentation. To get started, check our Home Loan Eligibility Calculator to know the maximum loan amount you may be able to get.

Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.

SMFG India Home Finance Co. Ltd. (Formerly Fullerton India Home Finance Co. Ltd.)
CIN number: U65922TN2010PLC076972

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