What a sanction letter is — and what it definitely is not

Updated September 2026 2 min read

What it contains

• The sanctioned amount
• The interest rate, and whether it is fixed or floating
• The tenure and the EMI
• Processing fee and other charges
• Security to be created
• Conditions precedent — everything that must happen before money is released
• A validity period, often 30 to 90 days

Read the conditions, not the headline

This is where people come unstuck. Typical conditions include satisfactory legal and technical clearance on the property, submission of original title documents, creation of the mortgage, insurance, and sometimes a specific document the lender has not yet seen.

Until every one is satisfied, the sanction is a statement of willingness, not a commitment to pay. A property that fails legal or technical clearance can turn a sanction into nothing, through no fault of yours.

Sanction, in-principle approval and disbursement

In-principle approval — based on your income alone, often before a property is identified. Useful for negotiating; not a sanction.

Sanction letter — the lender has assessed you and, usually, the property, and is willing to lend on stated terms subject to conditions.

Disbursement — money released, after conditions are met and the mortgage is created. On a construction loan this happens in stages.

Practical points

• Check the validity date. A lapsed sanction usually means re-assessment, and rates may have moved.
• Check the rate is what you were told. Verbal indications and written sanctions differ more often than they should.
• Check whether the rate is linked to a benchmark and how often it resets.
• Check the prepayment terms before you sign, not later.
• Do not pay a large advance to a seller or builder until conditions are satisfied and disbursement is confirmed.

A sanction letter is genuinely good news. It is simply not the end of the process, and treating it as such is how people end up committed to a purchase they cannot complete.

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