Based on the documentary proof, the bank decides whether or not the loan can be sanctioned or provided to you. The quantum of the loan that can be sanctioned depends on this. The bank will give you a sanction letter stating the loan amount, tenure and the interest rate, among other terms of the home loan. The stated terms will be valid till the date mentioned in that letter.
When the loan is actually handed over to you, it amounts to disbursement of the loan. This happens once the bank is through conducting technical, legal and valuation exercises. One may opt for a lower loan amount during disbursement against what is mentioned in the sanction letter. At the disbursal stage, you need to submit the allotment letter, photocopies of title deed, encumbrance certificate and the agreement to sell papers. The interest rate on the date of disbursement will apply, and not the one as per the sanction letter. In such a case, a new sanction letter gets prepared.
The loan can be disbursed in full or in installments, which usually does not exceed three in number. In case of an under construction property, the disbursement is in installments based on the progress of construction, as assessed by the lender and not necessarily according to the developer's agreement. Make sure to enter into an agreement with the developer wherein the payments are linked to the construction work and not pre-defined on a time-based schedule. In case of a fully constructed property, the disbursement is made in full.
Source: illis blog