Homebuyers purchasing under-construction properties should understand partial disbursement before signing a home loan agreement, as the timing of loan releases can directly affect their monthly expenses during construction. Unlike loans for ready-to-move-in or resale properties, which may involve a single disbursement, loans for properties under construction are generally released in stages as the building progresses. This arrangement links the lender’s payments to construction milestones and determines how much interest borrowers pay before taking possession of their homes.

Partial disbursement means the lender releases the sanctioned loan amount in instalments rather than transferring the entire sum upfront. The amount released at each stage depends on the progress of construction and the terms agreed upon with the lender. Each subsequent payment typically requires a demand letter from the builder and supporting evidence of completed work. The lender may arrange an inspection through its engineer before approving the next instalment, helping ensure that the disbursement corresponds to the project’s progress.

Disbursement commonly begins when foundation work starts, followed by payments at the plinth or column stage, roof-slab completion, brickwork and plastering, and the finishing stage. The exact percentages vary by lender, project and payment schedule. One illustrative structure allocates around 15–25% of the sanctioned amount at the foundation stage, another 20–25% at the plinth or column stage, 25–30% around the roof and lintel stage, and a further 15–20% during brickwork and plastering. The remaining amount is released as the property approaches completion, subject to the lender’s conditions.

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The disbursement schedule also influences repayments during construction. Under the pre-EMI option, borrowers generally pay interest on the amount disbursed so far rather than repaying the principal through regular instalments. As the lender releases additional amounts, the interest payable can increase. Under a full EMI arrangement, borrowers begin paying instalments that include both principal and interest, according to the loan terms. The choice between these options can affect monthly cash flow, the pace at which the outstanding principal reduces and the overall interest cost.

According to an Urban Money report cited in the article, the volume and value of home loan disbursements in major Indian cities increased by 10% and 15%, respectively, in financial year 2024–25. The figures highlight the scale of housing finance activity, while the growing use of construction-linked payments makes it important for buyers to understand how their loan will be released. Construction periods can last 12 to 36 months or longer, depending on the project, and delays may extend the time buyers must manage loan-related expenses before moving in.

Before signing the agreement, buyers should ask their lender for a written disbursement schedule, clarify the conditions for each release and compare pre-EMI payments with full EMI obligations. They should also understand when interest begins accruing, whether repayments change as additional funds are released, and how construction delays could affect their finances. Reviewing these terms alongside the builder’s payment demands and expected possession date can help buyers plan their budgets more realistically and avoid unexpected monthly outflows during construction.

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