What is disbursement?
Also called: loan disbursal, tranche payment, part disbursement, full disbursement
Disbursement is the release of your sanctioned home loan money, paid by the lender straight to the builder or seller. For a ready flat it's usually one payment; for an under-construction flat it comes in tranches as each construction stage is completed.
On a resale or ready-to-move flat, the bank typically issues a demand draft or does a transfer to the seller on the day of registration, and keeps the original sale deed as security. If the seller has an existing loan, part of the money goes to that lender to close it and release the title documents.
Under-construction purchases work differently. The builder raises a demand letter when a stage is complete (plinth, a particular slab, brickwork, possession), you forward it to the bank with your own share paid, and the bank releases its portion. Many lenders also ask for an architect's or engineer's stage certificate. The RBI has told banks not to release money ahead of actual construction, which is why schemes that promised large upfront disbursal to builders fell out of use after 2013.
Two practical points. Interest starts only on the amount released, so in the early years of a construction-linked plan you pay pre-EMI on a small sum, rising with every tranche. And the order of payments matters: most banks insist that your own contribution goes in first, so if you've budgeted ₹15 lakh of savings, expect the first two or three demands to be paid entirely from your pocket.
Keep a running sheet of what the builder has demanded, what you paid and what the bank paid. Mismatches, like a builder demanding a slab that isn't cast yet, are a warning sign and worth checking against the quarterly progress the project files on its state RERA page.
For an ₹85 lakh flat in Mohali on a construction-linked plan, the buyer pays the first ₹17 lakh herself. When the builder's demand for the fourth slab arrives, the bank releases ₹8.5 lakh directly to the project's collection account, and her pre-EMI rises accordingly.
Buyers let the bank pay the builder without confirming the money reached the project's RERA collection account. Always get the builder's receipt for every tranche and match it with the bank's disbursement advice.
Questions people ask about disbursement
How long does disbursement take after the documents are submitted?
For a resale flat, usually a few working days once the legal and valuation reports are clear. Stage payments for an under-construction flat are often released within a week of a complete demand letter.
Can I stop further disbursement if construction stalls?
Yes. Write to the lender asking it to hold further tranches. It's your loan, and banks will generally not release money against a demand you did not approve.