Understanding MODT Charges (Memorandum of Deposit of Title)

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Estimated reading time: 7 minutes

When you take out a home loan, you’ll encounter various fees and charges, one of which is the Memorandum of Deposit of Title Deed (MODT) charge. This fee is often overlooked but plays a crucial role in the loan process, similar to equitable mortgage charges.

The MODT, also known as MOD (MOD full form in banking), is a legal document that verifies the lender holds the title deed as collateral until the loan is fully repaid. Understanding MODT charges and NOI charges for home loan can help you better prepare for the financial aspects of buying a home and avoid unexpected costs.

What Are MODT Charges?

When a property is being financed, the borrower deposits the title documents of the property with the lender as a form of security. MODT is a fee charged by the lender for this deposit.

The charge is a legal acknowledgment that the documents have been handed over to the lender without the actual transfer of ownership or sale of property. This is similar to a MOD loan or MOD in bank loan.

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Why Do Banks Impose MODT Charges?

Banks have several reasons for imposing MODT charges, primarily related to legal requirements and security measures. These charges play a crucial role in the mortgage process.

Legal necessities:
Serves as proof of mortgage
Creates a legal obligation for the borrower
Establishes a right of claim for the lender
Security reasons:
Ensures lender’s hold over the property as collateral
Enables loan recovery through property sale in case of default
Regulatory requirements:
Mandated by the Registration Act of 1908
Ensures transparency and traceability in property transactions
Provides a clear record of ownership and financial liabilities

How to File MODT Online?

Time needed: 2 minutes

Here’s how To file MODT Online:

Obtain Notice of Intimation (NOI)
Secure the NOI from your lender, which details your home loan disbursal. This document is essential for the MODT process.
Timely Submission
Ensure you acquire and submit the NOI to the sub-registrar’s office within 30 days of your loan agreement.
Access E-Filing Portal
Visit the e-filing portal of your state’s Department of Registrations and Stamps. Each state in India has its specific portal for such filings.
Prepare Required Documents
Gather all necessary documents for MODT deed registration.
Fill Out Digital Form
Complete the digital form provided on the portal, entering required personal and property details.
Choose Payment Method for Stamp Duty: challan generated online.
Select your preferred mode of stamp duty payment, which could be via demand draft, e-payment, or cash payment at designated banks or through a
Submit Form and NOI:
After filling out the form and arranging payment, submit the form along with the NOI at the respective sub-registrar’s office.
Optional Lender Assistance:
Consider requesting your lending institution to handle the filing of the MODT on your behalf for added convenience.

How to File MODT Offline?

Obtain Notice of Intimation (NOI): Get the NOI from your lender, which provides details about your home loan disbursal.
Visit the Sub-Registrar’s Office: Take the NOI to the sub-registrar’s office, fill out the required form, and attach the NOI.
Submit Required Documents: Along with the form and NOI, submit any additional documents requested by the office.
Pay the Stamp Duty: Go to a designated bank to pay the stamp duty. The bank will verify your identity before processing the payment.
Obtain Stamped Proof: After paying the stamp duty, the bank will issue a stamped proof of payment.
Final Submission: Take the stamped proof and a photocopy of the NOI back to the sub-registrar’s office. Submit these for the final verification.
Complete the Registration: The sub-registrar will review your application and, upon verifying the proof of duty payment, accept the hardcopy of your documents.

Steps to Cancel MODT Deed?

Obtain NOC: Secure a No Objection Certificate (NOC) from your lender that includes your name, property details, loan account number, and states that all dues are cleared and the lender has no claim on the property.
Request Deed of Receipt: Along with the NOC, request a ‘Deed of Receipt’ from your lender, which serves as proof that they have cancelled the MODT on their end.
Visit Sub-Registrar’s Office: Take both the NOC and the Deed of Receipt to the sub-registrar’s office and request the removal of the lien from your property.

This process is similar to MOD cancellation charges and may involve cancellation deed format preparation.

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Are there Any Charges for Signing The MODT?

When you secure a home loan, signing a Memorandum of Deposit of Title Deed (MODT) is a critical step that involves some costs.

Here’s how it works:

The charges for signing an MODT primarily consist of stamp duty and processing fees.
It usually ranges between 0.1% to 0.5% of your loan amount.

For example, if your home loan is ₹35 lakhs and the MOD charges are 0.5%, your cost would be around ₹17,500.

Impact of MODT on the Borrowers

The he Memorandum of Deposit of Title Deeds (MODT) is more than just an added expense for borrowers.

When taking out a home loan, borrowers might wonder why they are responsible for the MOD charges, especially since it seems like the bank benefits more from holding onto the title deeds:

When the bank can request extra payments or collateral.
Steps for property repossession, including notice periods.
Bank’s obligation to return title documents and provide an NOC upon full repayment.
Borrower’s right to legally demand property titles if the bank delays returning documents.

Other Additional Home Loan Charges to Be Aware Of

While MODT charges are significant, there are several other fees associated with home loans. Being aware of all these charges helps in comprehensive financial planning.

Additional charges:

Comparison with MODT charges:

MODT: Specifically for securing a loan with a property title deed
Others: Cover broader aspects of property purchase and loan processing

Tips for managing charges:

Compile a detailed list of all potential expenses from the lender
Budget for each cost in the overall financial plan
Explore competitive loan offers
Negotiate with lenders to potentially reduce charges

How Credit Dharma Can Help

Credit Dharma provides support for navigating home loans and associated charges, including:

Detailed consultation on home loan options
Assistance with MODT payment and cancellation process
Strategic financial planning for loan-related costs
Guidance on home loan closure procedure and home loan closure documents

Conclusion

Understanding MODT charges is crucial for a smooth home loan experience. While these charges may seem minor, they significantly impact the overall cost of your loan. By staying informed and seeking expert guidance from platforms like Credit Dharma, you can ensure a more financially sound home loan journey.

For more detailed assistance on home loans and MODT charges, visit Credit Dharma.

Frequently Asked Questions

Are there additional fees for MODT cancellation?

Yes, there may be nominal fees for MODT cancellation, which can vary by lender and state. It is advisable to clarify these charges with your lending institution at the time of loan sanction to avoid unexpected costs.

How can MODT charges impact your home loan?

MODT charges can increase the overall cost of your home loan, affecting your monthly repayments and loan-to-value ratio (LTV). It is important to account for these charges to ensure they fit within your financial plan.

How are MODT charges calculated?

Interest on the refundable deposit is generally many times lower than a title deed deposit charge, which usually comes as a percentage of the home loan amount. State and lender-specific, typically between 0.1% – 0.5% of the loan amount.

Why are MODT charges important?

These charges are crucial as they serve legal proof or record of your title deeds against the property with the lender. This means the bank has a legal right over your property if you go into default on your loan, and this is how most mortgage types work.

What are MODT charges in home loans?

MODT (Memorandum of Deposit of Title Deed) charges are fees levied by banks or lending institutions when you deposit your property’s title deed as security for your home loan. These charges validate the loan agreement and ensure the lender’s legal claim over the property.