NEWS & ADVICE : HOME LOANS
Know your home loan better
By Joseph Samson
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Pre-EMI

In case you plan to buy a property that is under construction, then the lender does not provide the entire loan amount to the builder in one go. Payment is made in installments till the time construction is complete and once it is over, the full payment is released. During this time, before the entire loan is disbursed to the builder, you have to pay pre-EMI to your lender. This pre-EMI is actually the interest on the amount disbursed till the final disbursement is made. Once the full disbursement is made, your EMI starts.

Disbursement

Money paid out to discharge a debt or an expense is called disbursement. It is the actual payout to the borrower of loan funds, in whole or part. If the payment is made fully at one go then it is referred to full disbursement. Here the lender gives the entire loan amount to the seller once the borrower completes all the formalities including document submission and payment of down payment.

However if the lender gives the loan amount in stages then it is called partial disbursement. It is generally made when the borrowers buy a home that is under construction.

In some cases when the lender agrees to give out the full amount of the loan taken for a house that is still under construction, then this is known as advance disbursement. This is a facility that the lender provides when the borrower request him or he is fully convinced that the builder will complete the construction on time.

Credit appraisal

It is the process by which the lender assesses the credit worthiness of the borrower before sanctioning the loan. It revolves around a certain number of factors such as verification of borrower's savings, income, age, qualifications, nature of work, etc. Through this procedure the lender assures if the borrower is eligible for a loan and thereby decides on the loan amount to be sanctioned.


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