Hey guys. I have noticed many people have a lot of confusion around loan terms, especially the sanction vs disbursement difference. A loan sanction is when a lender first approves a loan amount. The subsequent transfer of the authorised amount to the borrower or a third party following the fulfillment of all loan requirements is known as loan disbursement.
Loan Sanction vs Loan Disbursement
When you apply for a loan in India, say, a home or personal loan, the journey begins with the sanction stage. Here, the lender evaluates your application and documentation to assess your eligibility based on factors like your income, credit score, job stability, and the property’s value.
Upon approval, the bank issues a Loan Sanction Letter. It includes key details such as the sanctioned amount, interest rate, tenure, EMI, terms, and the validity period, typically a few months.
This letter is a conditional approval, indicating that the lender is willing to provide financing, subject to the fulfillment of remaining requirements (e.g., property documents, legal clearances).
Once all conditions are met by submitting a signed sanction letter, completing legal and technical inspections, and fulfilling documentation formalities, the process advances to the disbursement phase.
During disbursement, the sanctioned funds are released to your account or directly to the seller or developer, depending on the nature of your loan and property (ready-to-move-in vs under-construction).
This is the point when the lender actually transfers the loan amount, effectively initiating your repayment obligations. I hope you found this information helpful.
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What is Difference Between Sanction vs Disbursement?
ruchi
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4 months
2025-09-04T19:18:05+00:00 2025-09-04T19:18:07+00:00Comment
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