Definition
Disbursement
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When the funds of an approved home loan is released for the borrower to access, it is said to be disbursed.
The disbursement date is a critical piece of information to a lender as it is the day in which they start charging interest on a mortgage.
Even if the first monthly payment date is due only when the first full calendar month is over, the borrower can still be subject to per diem interest.
For example, if the loan funds be disbursed on 17 July, the first payment date will be 1 September for the period of August. The interest charges for 17 July to the end of the month will be pro-rated charge on the borrower.
At times when administrative or processing fees are involved, lenders tend to deduct these fees at the point of disbursement.
For example if a personal loan is approved for $10,000 and the fees are $500, $9,500 will be disbursed to the borrower but the amount owed will remain at $10,000.
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