Before telling you about the PD, let me first inform you of the PD full form in home loan. It is a Partial Disbursement. It refers to a loan disbursement strategy where the sanctioned amount, especially in the case of home loans, is not released in a single lump sum but instead is disbursed in stages.
What is PD in Home Loan India?
The partial disbursement or PD is aligned with specific milestones or conditions outlined in the agreement. In home loans, this commonly applies to under-construction properties where the lender releases funds gradually as construction progresses.
One key advantage for borrowers under the PD model is cost savings. Here, Interest is calculated only on the amount disbursed so far, not the full sanctioned amount, potentially reducing the immediate interest burden.
From the lender’s perspective, this method offers risk mitigation by ensuring funds are released only when the borrower meets each construction milestone, thus maintaining tighter control over the disbursement process.
However, borrowers must plan carefully, as partial disbursements require careful alignment of expenses with each milestone.
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I wanted to avail a home loan to get my dream house completed and that is when I came to know
what is PD in home loan from the bank officials. It is one of the various stages of disbursement of a home loan. The PD full form in home loan is Partial disbursement. You must be knowing that loan disbursement depends on a number of factors and the bank accordingly release the loan. If a bank chooses to release the loan in various stages, it is called partial disbursement.
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How to explain Partial disbursement?Depending on the speed and level of progress of a constructing house, a bank releases the loan in various stages. To help you understand it better, let me cite an example.
Suppose you are constructing a house, the bank will disburse 15% of the loan amount once the foundation work gets done. They will again release, say 30% when all the walls get erected. Banks make a partial disbursement for borrowers who want to buy a house that is under construction or needs to be constructed.
What are the pros and cons of PD?Some of the pros and cons of Partial Disbursement are:
Pros:
It allows the borrowers to have some amount of the loan money ahead of time
Helps the borrowers to manage their finances effectively
Allows for pre-construction expenses or down payments
Provides lenders with some assurance of repayment
Cons:
PD calls for additional paperwork and legal documentation
Can be costly if not executed properly
It is hard to track repayments
Sometimes calls for extra interest costs over the life of the loan
This is the basic concept of
what is PD in home loan.
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What is PD in Home Loan?
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2023-01-24T09:58:01+00:00 2023-01-24T10:00:56+00:00Comment
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