For a resale or ready-to-move purchase, the bank usually disburses the full loan at registration, paying the seller directly (and closing the seller’s existing loan, if any). For under-construction flats, it disburses in tranches against the builder’s demand letters as construction milestones are certified.
Interest is charged only on the amount disbursed. Under a construction-linked plan, that leads to pre-EMI interest until the full loan is released, unless the buyer chooses full EMIs from the start.
Before each tranche, the bank may inspect the site and check that the demand matches the payment plan and the stage of work reported on the RERA website.
Example
A buyer in Gurugram has a ₹80 lakh loan on a ₹1 crore under-construction flat. After paying the ₹20 lakh own contribution, the bank releases ₹15 lakh when the plinth demand letter arrives, then further tranches with each slab. Two years later, at possession, the last tranche is disbursed and full EMIs begin.
Figures are illustrative, not market rates.
Questions about Loan disbursement
Is the loan paid to me or to the seller?
To the seller or builder. Banks disburse directly to the party selling the property, against the agreement and receipts, so the money goes into the purchase rather than the borrower’s account.
Why does the bank disburse in stages?
For under-construction property, the bank pays only for work done. Linking disbursement to construction stages protects both the bank and the buyer if the project slows down.
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