4 things to know about home loan Sanction letter and disbursal amount before applying for one

A home loan sanction letter is an official document issued by the bank for its borrowers.

home loan Sanction letter and disbursal amount

A home loan sanction letter is an official document issued by the bank for its borrowers. The letter contains details of the loan terms, approval intimation, and the sanctioned loan amount. It takes around a week to issue the sanction letter after the application. After learning the borrower's income source(s), credit history, and property verification, a sanction letter is issued.

1. Turnaround time to receive Sanction letter

The Federal Bank for instance, takes 3-14 days to sanction home loans.

Similarly, HDFC Ltd. takes around 5-7 days. The sanction letter for a home loan has limited validity, and you have to use the money within the given timeframe. The validity period varies with institutions. A sanction letter from HDFC Ltd. typically has a validity of three months from the day it was issued. You can reopen a lapsed sanctioned letter which will be valid for another three months. The validity at the Federal Bank is 30 days. 

Also Read: Understand these home loan charges before applying 

2. Can you avail of a Home loan less than your sanctioned amount?

In short, yes! The institution sanctioning the amount expects the borrower to use all the money. If a borrower wants to avail of a lesser amount, they can tell it to the lender before disbursement and have the terms and conditions changed. Lenders can cancel sanctioned loans also if the terms and conditions of the sanctioned loan are not met. These can be documentation, profiles, property checks, etc. 

3. Home Loan Disbursement Process

The borrower receives the disbursed amount upon the completion of the loan sanction. If a buyer has already paid the builder, the lender can reimburse the buyer if the buyer provides the required proof of payment. The borrower may pay an under-construction property's payments in full or in stages. 

Read: Things you must know about home loans

4. EMI on Sanctioned Amount or Disbursed Amount?

Players in the industry generally calculate the EMI on the disbursed value, not the sanctioned amount. However, some institutions calculate the EMI on the sanctioned amount. For example, Federal Bank takes EMI on the sanctioned amount even on an 80% disbursement. They calculate the interest on the disbursed amount, and the additional amount is adjusted with the principal amount. 

If you face a miscalculation with the EMI, you must contact the concerned lender and issue a complaint. You can escalate the matter to a POC like the Grievance Redressal Officer. You can approach NHB (National Housing Bank) for any grievance you face with a housing finance company, as they are the apex regulatory body for licensing and regulation of housing finance companies in our country. 


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