MOD in Home Loan: Full Form, Meaning & Importance

A Memorandum of Deposit (MOD) is a crucial legal document in the Home Loan process, ensuring security for both the lender and the borrower. This document formalises the deposit of property title deeds as collateral for the loan, protecting the interest of the lender while providing clarity on ownership and repayment terms. Understanding what MOD in a Home Loan is, its full form, meaning and importance helps borrowers make informed decisions and manage their financial commitments with confidence.

What is MOD in a Home Loan?

MOD is an agreement signed by the borrower and the lender, stating that the property title deeds are deposited with the lender as security for the Home Loan amount. The MOD document is essential for creating a mortgage deed or equitable mortgage, which legally transfers ownership of the property to the lender until the loan is fully repaid. The MOD ensures that any future transactions involving the property require the consent of the lender, protecting both parties throughout the loan tenure.

Also Read: Home Loan: All You Need to Know

MOD Full Form and Legal Significance

The full form of MOD is Memorandum of Deposit of Title Deed. It is a legal instrument that formalises the deposit of property documents as collateral. The MOD is registered with the local registrar, making it a legally binding agreement. This registration provides the lender with legal protection, ensuring the property can be repossessed in the event of default. The MOD also assures the borrower that the property is protected under the applicable legal framework and that the rights of the lender are clearly defined.

How MOD Works in the Home Loan Process

Here is how the MOD in the Home Loan process typically works step-by-step:

1. Loan Approval: After the loan is sanctioned, the lender requests the borrower to deposit the original property documents (title deed, sale deed and NOC).
2. Drafting MOD: The lender drafts the Memorandum of Deposit of Title Deed specifying loan details, property description and the names of both parties.
3. Execution: The borrower and bank representative sign the MOD.
4. Registration: The MOD is registered at the Sub-Registrar Office (SRO) in the jurisdiction of the property.
5. Payment of MOD Charges: Applicable MOD registration charges and stamp duty are paid during registration.
6. Retention by Bank: The lender keeps the registered MOD copy and original property papers until the loan is fully repaid.

This ensures that the interest of the lender in the property is legally recorded, preventing double financing or fraudulent transfers.

Benefits of MOD for Borrowers and Lenders

The Memorandum of Deposit of Title Deed benefits both parties in the following ways:

For Borrowers:

• Simplifies the loan approval process without transferring property ownership.
• Protects the rights of the borrower to occupy and use the property.
• Acts as a secure record in case of disputes.

For Lenders:

• Provides legal assurance against loan default.
• Prevents property from being mortgaged with another financial institution.
• Facilitates faster loan recovery if required.

Thus, the MOD strengthens trust between lenders and borrowers in Home Loan transactions.

Also Read: Tenure For Home Loan: Minimum & Maximum Explained

MOD Charges in Home Loan: Calculation & Payment

The MOD charges are fees for registering the Memorandum of Deposit of Title Deed. They include stamp duty and MOD registration fees, which vary by state.

MOD charges range between 0.1% and 0.5% of the loan amount, depending on local government norms. For example:

• On a ₹50 Lakh Home Loan, the MOD charge could be around ₹5,000–₹25,000. The range depends on the stamp duty rates in the state. For instance, in Maharashtra, the stamp duty is 0.5%, while in Karnataka, it is 0.25%.
• Some banks may collect this as part of the loan disbursement process, while others require payment separately.

Who pays MOD charges?

Usually, the borrower pays the MOD fees as part of the Home Loan processing cost.

Breakdown of MOD Charges

The MOD registration charges include the following components:

• Stamp Duty: A state-specific percentage levied on the loan amount or MOD value.
• Registration Fee: Paid to the sub-registrar for recording the MOD document.
• Legal Fees: Charged by the empanelled lawyer of the bank for verification and drafting.
• Administrative Charges: Nominal fees for document handling and record maintenance.

In some cases, the bank may include these costs in the Home Loan processing fee for convenience.

Also Read: What is Home Loan Insurance: Meaning, Types & Benefits

MOD Registration and Document Requirements

The MOD registration process ensures that the interest of the lender in the property is officially recorded. Here is how it works:

1. Prepare Documents: The bank drafts the MOD, including the loan amount, borrower name and property description.
2. Submit Documents: The borrower provides the necessary property and identity documents to the bank or registrar.
3. Pay Fees: MOD registration fees and stamp duty are paid as per state rules.
4. Registration at the SRO: Both the borrower and the lender (or an authorised representative) sign the document before the Sub-Registrar of Assurances.
5. Record Update: The office of the registrar records the MOD and issues a receipt.

Documents Required for MOD Registration:

• Original property title deeds and sale deed
• Loan sanction letter and agreement
• ID and address proof of the borrower
• PAN card and photographs
• Bank authorisation letter

The entire registration process usually takes 1–3 working days, depending on the workload of the office of registrar.

How to Cancel MOD After Loan Repayment?

Once the Home Loan is repaid in full, the borrower can initiate MOD cancellation to remove the lien on the property.

Steps to Cancel MOD:

1. Obtain NOC: The bank issues a No Objection Certificate (NOC) confirming loan closure.
2. Request Release Deed: The bank prepares a Deed of Release or MOD Release Letter.
3. Visit Sub-Registrar: Submit the NOC and release documents for official cancellation.
4. Pay Nominal Fees: A small registration charge may apply.
5. Retrieve Documents: The borrower can then collect original property documents from the bank.

Online MOD Cancellation Process

In several states, online MOD cancellation is available via the portal of the state registration department.

Steps include:

• Logging into the online registration system of the state.
• Uploading scanned copies of the NOC and property details.
• Paying cancellation fees digitally.
• Receiving confirmation of lien removal via email or a downloadable acknowledgement.

Implications of MOD for Borrowers

The MOD acts as a legal safeguard during the loan period, but also affects the financial management of the borrower:

• The property cannot be sold or remortgaged until the MOD is cancelled.
• Any default allows the bank to claim rights over the property.
• Timely cancellation after repayment ensures clear property ownership.
• Borrowers should always keep copies of the MOD and NOC for future verification.

Hence, while the MOD offers security, it also demands responsible management from the borrower.

Final Thought

The Memorandum of Deposit (MOD) is an important document in the Home Loan process, providing legal protection and clarity for both lenders and borrowers. By understanding the full form of MOD, meaning and importance, borrowers can make informed decisions and manage their financial commitments effectively. With Godrej Capital, experience flexible EMIs, quick digital sanction and the trust of a 128-year legacy, making your Home Loan journey seamless and secure.

Apply now for a Home Loan.

FAQs

Q.1. Is MOD mandatory for all Home Loans in India?

A. Most lending institutions require MOD registration as part of the loan process.

Q.2. Are MOD charges refundable?

A. MOD charges are government fees and are non-refundable once paid.

Q.3. Can MOD be transferred if I refinance my Home Loan?

A. When you transfer your loan, the existing MOD is cancelled and a new MOD is executed with the new lender.

Q.4. What happens if I default on my loan with MOD in place?

A. In the event of default, the lender can legally claim ownership of the mortgaged property.

Q.5. How long does the MOD registration process take?

A. MOD registration takes 1–3 working days at the office of the sub-registrar.

Q.6. Can I apply for a Home Loan without signing an MOD

A. Most lenders require the MOD to be signed to secure the loan against the property.

Disclaimer:

The content presented on this page, including images and factual information, is intended solely as a summary derived from publicly available sources. GHFL/GFL (“Company”) does not claim ownership of such information, nor does it represent that the Companies have exclusive knowledge of the same. While efforts are made to ensure accuracy, there may be inadvertent errors, omissions, or delays in updating the content. Users are strongly encouraged to independently verify all information and seek expert advice where necessary. Any decisions made based on this content are solely at the discretion and responsibility of the user. Godrej Capital and its affiliates assume no responsibility for any loss or damage that may result from the use of or reliance on the information provided herein.