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Take loan amount less than sanctioned?

Last updated: May 13 2013
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  • Take loan amount less than sanctioned?

    Hello

    I have applied to ICICI for NRI home loan (floating 10.5%).

    Sanctioned amount is 45 lakhs.

    My flat is under construction, so payment to builder from bank will be done in installements of 10% each (8 installments remaining to be paid to builder).

    My question is - suppose for some installment I have money ready in my bank account, and if I pay the builder directly without taking next disbursement, is that OK?

    e.g. in Mar I have 4.5 lakhs ready in my saving bank account, I pay builder directly. So now instead of taking sanctioned amount of 45 lakhs I only borrow 40.5 lakhs from ICICI.

    Will the bank cause any problems and force me to take entire 45 lakhs?

    Thank you!
  • #2

    #2

    Re : Take loan amount less than sanctioned?

    Originally posted by hankowkow View Post
    Hello

    I have applied to ICICI for NRI home loan (floating 10.5%).

    Sanctioned amount is 45 lakhs.

    My flat is under construction, so payment to builder from bank will be done in installements of 10% each (8 installments remaining to be paid to builder).

    My question is - suppose for some installment I have money ready in my bank account, and if I pay the builder directly without taking next disbursement, is that OK?

    e.g. in Mar I have 4.5 lakhs ready in my saving bank account, I pay builder directly. So now instead of taking sanctioned amount of 45 lakhs I only borrow 40.5 lakhs from ICICI.

    Will the bank cause any problems and force me to take entire 45 lakhs?

    Thank you!

    Hello everyone

    Would really appreciate if anyone has any information on this. Thanks!!

    Comment

    • #3

      #3

      Re : Take loan amount less than sanctioned?

      Hi,
      Its not abig issue in private bank.you can send an email to icici bank and ask them to disburse only 40 lakhs..And you can pay remaining amount to the builder.
      Please check with ICICI rep on this...they will guide you on this.
      It s very easy and simple process..HDFC and Axis bank has this facility.
      Thanks..
      Last edited December 31 2012, 02:52 PM. Reason: added

      Comment

      • #4

        #4

        Re : Take loan amount less than sanctioned?

        Originally posted by houseseeker View Post
        Hi,
        Its not abig issue in private bank.you can send an email to icici bank and ask them to disburse only 40 lakhs..And you can pay remaining amount to the builder.
        Please check with ICICI rep on this...they will guide you on this.
        It s very easy and simple process..HDFC and Axis bank has this facility.
        Thanks..
        Does ICICI bank have pre-payment charges? Which is a better bank for hoam loan amongst Axis and HDFC?

        Comment

        • #5

          #5

          Re : Take loan amount less than sanctioned?

          I am thinking of doing something like this. Please suggest if this is advisable and doable or not.

          The loan amount is 40L on under construction property.
          Payment1 of 10L: Let bank disburse the payment and I start paying pre-EMI of 10K/month.
          Payment2 of 5L: Let bank disburse the payment and pre-EMI becomes 15K/month
          Payment3 of 5L: I pay it myself to builder
          Payment4 of 5L: I pay it myself to builder
          Payment5 of 10L: Let Bank disburse the payment and pre-EMI becomes 25K/month
          Payment6 of 5L: I pay it myself to builder

          All payments done and bank disbursed only 25L instead of 40L initially applied for. I choose for full EMI now and don't want any other disbursement. And in some time, start paying principal back to the bank as well.

          Do banks allow disbursing less than what we applied for? And stopping the loan in the middle(need no more amount/disbursement from bank) and start paying principal and interest together and if have liquid cash, then principal repayment.

          Comment

          • #6

            #6

            Re : Take loan amount less than sanctioned?

            Originally posted by saikat001 View Post
            Does ICICI bank have pre-payment charges? Which is a better bank for hoam loan amongst Axis and HDFC?


            Hi Saikat001
            I dont have any idea abt ICICI pre-payment charges.But Axis and HDFC doesnt have pre payment charges/pre closure charges.Both banks(Axis and HDFC)are good..Please check the following points before taking loan from AXIS/HDFC.
            1)Pre-Payment -N number of times per year-Max amount per year..
            Ideally we can pay the principal amount(no min and max limit) as per our wish
            2)Pre-Clsoure charges-it should be nil..
            3)Conversion charges-Changing interest rate(11.5% for 3 yrs old customer) to current interest rate(10.25%).
            4)Check any offers for new year..etc..
            And decide AXIS/HDFC...
            Please dont go to ICICI homeloan as didnt recieve good feedback

            Comment

            • #7

              #7

              Re : Take loan amount less than sanctioned?

              Originally posted by satymish View Post
              I am thinking of doing something like this. Please suggest if this is advisable and doable or not.

              The loan amount is 40L on under construction property.
              Payment1 of 10L: Let bank disburse the payment and I start paying pre-EMI of 10K/month.
              Payment2 of 5L: Let bank disburse the payment and pre-EMI becomes 15K/month
              Payment3 of 5L: I pay it myself to builder
              Payment4 of 5L: I pay it myself to builder
              Payment5 of 10L: Let Bank disburse the payment and pre-EMI becomes 25K/month
              Payment6 of 5L: I pay it myself to builder

              All payments done and bank disbursed only 25L instead of 40L initially applied for. I choose for full EMI now and don't want any other disbursement. And in some time, start paying principal back to the bank as well.

              Do banks allow disbursing less than what we applied for? And stopping the loan in the middle(need no more amount/disbursement from bank) and start paying principal and interest together and if have liquid cash, then principal repayment.
              Hi Satymish,
              1)Yes banks allow disbursing amount less than what they have sanctioned.Ex.Sanctioned-40L and expected -25L.. simple process..Private bankers expect an email from you to saying that i need only 25L..i will remaining payment from my own source.you dont need to worry about it..Please check with your private bank loan coordinator..He will guide you the process
              2)you can pay principal-Pre Payment once you start EMI for your loan.
              3)Payment 1 to Payment 6 Order-am not sure on this..But i believe that it is possible and confirm with them..

              4)I believe that you can pay Principal(Pre payment) Once EMI starts..In Pre-EMI period, you cannot do pre payment..as you know in Pre-EMI stage, you will pay only interest for disbursed amount.
              Last edited January 1 2013, 02:47 PM. Reason: added

              Comment

              • #8

                #8

                Re : Take loan amount less than sanctioned?

                1. As per RBI new guidelines , non of the bank (private or government) has any loan pre-payment or pre-closure charges.
                RBI asks banks not to levy pre-payment charges on home loans - Economic Times

                http://rbidocs.rbi.org.in/rdocs/noti...CS050612FL.pdf
                2. If you want to pay any EMI by yourself you need to inform your bank and you can pay by yourself. Its very easy . Better you talk to your agent/bank person that has helped you for loan.
                Last edited January 1 2013, 03:04 PM. Reason: want to add more info

                Comment

                • #9

                  #9

                  Re : Take loan amount less than sanctioned?

                  Originally posted by satymish View Post
                  I am thinking of doing something like this. Please suggest if this is advisable and doable or not.

                  The loan amount is 40L on under construction property.
                  Payment1 of 10L: Let bank disburse the payment and I start paying pre-EMI of 10K/month.
                  Payment2 of 5L: Let bank disburse the payment and pre-EMI becomes 15K/month
                  Payment3 of 5L: I pay it myself to builder
                  Payment4 of 5L: I pay it myself to builder
                  Payment5 of 10L: Let Bank disburse the payment and pre-EMI becomes 25K/month
                  Payment6 of 5L: I pay it myself to builder

                  All payments done and bank disbursed only 25L instead of 40L initially applied for. I choose for full EMI now and don't want any other disbursement. And in some time, start paying principal back to the bank as well.

                  Do banks allow disbursing less than what we applied for? And stopping the loan in the middle(need no more amount/disbursement from bank) and start paying principal and interest together and if have liquid cash, then principal repayment.
                  what does pre-emi mean?
                  doesnt it include principal part of loan?
                  cant i do pre payment before taking full sanctioned loan amount?

                  waiting someone to clear my doubt.
                  thanks

                  Comment

                  • #10

                    #10

                    Re : Take loan amount less than sanctioned?

                    what does pre-emi mean?
                    Your payment is towards the interest only. Typically (but not necessarily) it is around 70% of your EMI.

                    doesnt it include principal part of loan?
                    No

                    cant i do pre payment before taking full sanctioned loan amount?
                    Yes. Some banks have a lock-in period (typically 6 months from 1st disbursement) for pre-payment while others don't.

                    Comment

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