Glossary
Disbursement
Disbursement is the bank actually paying out your home loan, in one go for a ready flat or in stages for an under-construction one.
In plain words
Once your loan is sanctioned and the property clears the bank’s checks, the bank pays the money. That payment is the disbursement. For a ready flat, the bank usually pays the seller in full at registration. For an under-construction flat, it pays the builder in parts as each stage is reached, following the construction-linked plan in your agreement.
Why it matters to you
Interest starts on each rupee only when it is disbursed. So in a stage-wise loan, your monthly payment grows as more is paid out. Until the full loan is released, you may pay pre-EMI, interest only, or choose full EMI from the start.
An illustrative example: on a ₹60 lakh loan at 8.5%, if ₹15 lakh has been disbursed, pre-EMI is ₹15,00,000 × 8.5% ÷ 12 ≈ ₹10,625 a month. When disbursement reaches ₹45 lakh, it rises to about ₹31,875. The full EMI on ₹60 lakh over 20 years is about ₹52,069.
How each stage works
- The builder raises a demand letter for the stage.
- You pay your own share first, if any is due.
- You send the demand to your bank with a disbursement request.
- The bank may send an engineer to confirm progress.
- The bank pays the builder directly and updates your loan account.
Keep every demand letter, receipt and bank statement together. You will want them for tax and for your records.
Read more on the blog
Related terms
See all glossary terms. This page explains a term; it is not legal or tax advice, and rupee figures are illustrative.
FAQ
Disbursement: common questions
What is the difference between sanction and disbursement?
Sanction is the bank agreeing to lend. Disbursement is the bank actually paying the money.
Do I pay interest on the full sanctioned amount?
No. You pay interest only on the amount disbursed so far.
Who receives the disbursement?
Usually the builder or seller, directly from the bank. It rarely comes to your account.
Can disbursement be stopped?
The bank can pause if construction stalls, documents are missing or conditions are not met. Your tripartite agreement explains what happens then.
Want someone to walk you through it?
Ask the Reeva team about this, or anything else on your first-home paperwork. We will call back, with no pressure to buy.