Terms and agreement

At the time of loan disbursement and the stage of completion of the property, the reputation of the builder plays an important role. Lenders will pay the entire loan amount only in case of a fully constructed house that mean which has no pending work on the part of the builder. When someone purchases a house that is under-construction, the lender will not disburse the entire loan amount. A part of loan disbursement will be made as the loan amount gets disbursed in stages. If in case the lender pay the entire amount even if the house is under construction it is called advance disbursement. It occurs only in case the developer enjoys a very good reputation.
Interest rate on disbursement amount

When lender extends the loan sanction letter it specifies the rate of interest applicable on loan. However, the interest rate generally on the date on which the final disbursement has taken place is the actual interest rate applicable on the loan, whether the loan is fixed or floating. The loan is disbursed in stages. By the time one receives the final disbursement, the interest rates have risen by 50 basis points.

A few lenders insist on guarantee

Before the disbursement, a few lenders also require to arrange for a personal guarantee from a person who is not a co-borrower and as long as he or she is financially sound. This is done to ensure smooth repayment of the loan. Before loan is sanctioned, find out from the lender whether they have any such condition that needs to be met to obtain a guarantee on time and prevent any delays in disbursement of the loan.

Costs borne before disbursement

Before getting the disbursement money from the lender, one must record all l the expenses involved in acquiring the home like certain legal expenses, stamp duty charges, home search services. Apart from these, one will also need to pay processing fees to lender. Usually all these expenses are calculated as a percentage of total loan amount. If, due to any reasons, the lender refuses to sanction loan, the person is not entitled to receive a refund of these expenses from lender.

Conclusion for agreement

Just to ensure a hassle-free sanction and subsequent disbursement of the home loan, one must study loan documents and agreement carefully. This will ensure that the person will not feel been cheated by the lender and other financial institution.

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