Is your disbursed loan amount less than your sanctioned amount?

Buying your first home is usually strenuous leading up to closing the deal. It is subject to various exigencies, notwithstanding the financial burden. First time home buyers usually start by checking with the banks regarding their eligibility. It becomes easier to find the right property when you are clear of the budget basis your eligibility. Taking a sanction letter on basis of income is a standard practice these days. It is just an in-principle approval by the lender that you meet the criterion for a certain amount, subject to further checks when property is finalized. But the flip side is that the final loan disbursal could be less than the sanctioned amount.

A sanction for any loan is dependant of 3 primary factors- credit worthiness, capacity and collateral. While credit worthiness is based on your KYC, capacity is based on the income and collateral refers to the property being bought. While the first two would be considered for the income sanction, the property being bought would have a major bearing on the final sanction.

Once you finalize the property, you would have to submit the same to the bank/ lender. The property documentation would depend on the type of property being bought. If your buying an apartment directly from the builder, you would have to submit the following documents- original sale deed to be executed in favor of the customer, allotment letter, possession, receipts of payment, flat buyer agreement, lien mark of the lender and the tripartite agreement. In case of a resale, the documents required to be submitted to the lender are chain documents of the property- allotment letter, conveyance deed, sale deed, house tax receipts, sanction map etc.

The next steps involve a physical check of the property by a valuer. Post this, the lender evaluates the final sanction amount. Usually the lender sanctions upto 80% of the circle rate or the market value of the property, whichever is lower.

One scenario would be when you are buying a property under construction. In this case, notwithstanding the sanctioned amount, the disbursal would depend upon the payment plan of the builder and would come in tranches. So the effective intial disbursal would be less than the total sanctioned amount.

For the other scenario, lets take for example, you have an income of 1 lakh/ month. The loan amount you are eligible for is approximately 70 lakhs. Basis this, you can finalise a property worth 88 lakhs. But, the lenders valuation parameters pegs the property value at only 80 lakhs. So the effective sanction that the lender would be able to give you is 64 lakhs, much less that the income eligibility of 70 lakhs.

But there is a way to bump this sanction value a wee bit. If you are purchasing a ready property, you could take a fixture and fittings loan. To avail this loan, you would have to submit an architect-approved proposal for the requisite fixtures and fittings. Basis a physical check, you could be eligible for 100% of the architect’s estimate or 40% of the property agreement value, whichever is lower. But the differential cannot exceed the total income sanction. In the above case, the bank sanction is for only 64 lakhs, but you could always avail the differential of 6 lakhs for fixtures and fittings, provided it fits the eligibility criteria of the lender.

Check your loan eligibility at www.loanadda.com