Sanction Vs Disbursement in Loan

08 MAY, 2023

All About Loan Sanction

If you are considering applying for a loan or have already applied and are awaiting approval, you need to understand what is loan sanction. A loan sanction is the approval of the loan. Loan sanction meaning suggests that it is only the approval of the loan and not the disbursal of funds.

What is a Loan Sanction Letter?

The bank issues a loan sanction letter when the loan you have applied for is approved. The loan sanction letter is issued after the bank verifies all your details like address, income, credit history, assets, etc. A loan sanction letter includes details such as sanctioned loan amount, loan tenure, interest rate, EMI, etc.

All About Loan Disbursement

Disbursement of loan is when the bank delivers the amount to the borrower after verification and approval. The loan disbursement process does not take a lot of time. After receiving the home loan sanction letter, the disbursement takes 2-3 days.  Disbursement meaning in banking is receiving the amount of a loan.

As we see the world grow, we see there’s nothing permanent. Demands change, people evolve and lifestyle varies on day to day basis. But, generally, what stays constant is people’s urge to have a home of their own. And this emotion evokes the need for the right Home Loan. Before the search for the right loan begins, there are a few key points a home buyer needs to be aware of.

• Check Home Loan Interest Rate: It helps while repaying the home loan without disturbing the monthly budget. You can also calculate your home loan installments using a home loan EMI calculator
• Housing Loan Eligibility: With Housing Loan Eligibility Calculator, home-buyers can get an idea about the optimum loan amount they can afford, without facing financial difficulties

And most importantly,

• Loan sanction meaning: To verify all your details everything from the existing residential address to the CIBIL score, complete information is thoroughly checked. Once the bank has validated all the details, and your loan is approved, you will receive a home loan sanction letter that states your loan has been approved. A home loan sanction letter is valid for 6 months.
• Loan disbursement meaning: After receiving the bank loan sanction letter, the loan amount is disbursed in installments depending on the verification of the property and other terms and conditions as stated in the bank loan sanction letter

People often get confused between home loan sanction and disbursement. There’s a vast difference between the two. A bank loan sanction letter is only the approval of the loan. It does not mean the home loan amount will get disbursed without any further checks. A loan disbursement is the actual delivery of the amount from a bank account post property related verification & post any other required validations.

Here Are The Different Types Of Disbursement Of Loan:-

Full loan Disbursement Meaning

 When the loan disbursement process is completed in one installment, it is full loan disbursement. The bank hands over what is disbursed amount at one time. If the home-buyer is purchasing a home from a builder, then the cheque will begin in the builder's name.

Partial loan Disbursement Meaning

 When the loan disbursement process takes place in stages, it is partial disbursement. While purchasing an under-construction apartment, the amount will be released in stages on the basis of construction.

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Sanction Vs Disbursement FAQS

What is Loan Disbursement Meaning?

Disbursement meaning in banking is when the bank delivers the amount of loan to the borrower. It must not be confused with a bank loan sanction letter. Loan sanction meaning is only the approval of the loan. It is a document that guarantees your loan has been approved.

What is Disbursed Amount?

The disbursed amount is the amount you receive from your creditor after your loan approval. The loan disbursement process ends when you receive the disbursed amount. Disbursement meaning in banking is receiving the disbursed amount by the borrower. 

What happens after the loan sanction letter?

The procedure after home loan sanction is straightforward. The original property documents are handed over to the bank and are retained by the bank till the amount is repaid by the borrower. The procedure after home loan sanction involves the handing over of documents and disbursement of loan to the borrower.

Can a loan be rejected after the sanction letter?

You now know what is loan sanction letter- the loan approval, but it is possible to get your home loan application rejected even after you receive this letter. Any time between loan sanction and disbursement, your application can be rejected if there is any job instability or a drop in your credit score, or other such concerns.

How long does a loan disbursement take?

The time between loan sanction and disbursement is not too long. After you get the bank's approval through a sanction letter, your loan amount will be credited through NEFT within 24 hours to a week.

What happens after loan disbursement?

Home loan disbursement after registration means you will get the amount in your bank account. Post this, you will receive an email or SMS from your bank confirming the disbursal of your loan amount. The bank will also send you a confirmation letter in the welcome kit, EMI calendar, and amortization table to calculate the principal-to-interest ratio.