When taking a home loan, you’ll encounter MOD charges for a home loan, a crucial yet often overlooked fee.
The Memorandum of Deposit of Title Deed (MOD ) confirms the lender holds your title deed as collateral until the loan is repaid. Knowing about MOD and other fees like NOI charges helps you prepare financially and avoid surprises.
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 the property. This is similar to a MOD loan or MOD in bank loan.
What is the full form of MODT?
MODT stands for Memorandum of Deposit of Title Deed. It is a legal document executed when a borrower deposits their property’s title deeds with a lender as collateral for a loan.
This memorandum creates a charge on the property in favor of the lender, allowing them to sell the property to recover the loan amount in case of default.
The MODT is typically registered with the Sub-Registrar’s office, and stamp duty charges apply, usually ranging between 0.1% and 0.2% of the loan amount, depending on the state.
Why Do Banks Impose MOD Charges?
Banks have several reasons for imposing MOD 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
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How to File MOD Online?
Time needed: 2 minutes
Here’s how To file MOD Online:
- Obtain Notice of Intimation (NOI)
Secure the NOI from your lender, which details your home loan disbursal. This document is essential for the MOD process.
- Timely Submission
Ensure you acquire and submit the NOI to the sub-registrar’s office within 30 days of your loan agreement.
- Prepare Required Documents
Gather all necessary documents for MOD deed registration.
- 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.
- Fill Out the Digital Form
Complete the digital form provided on the portal, entering the 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 MOD on your behalf for added convenience.
How to File MOD 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 hard copy of your documents.
MODT Charges For Home Loans
MODT (Memorandum of Deposit of Title Deed) charges for home loans in India typically range from 0.1% to 0.5% of the total loan amount. Here are the key details:
Charge Percentage
- Typically ranges between 0.1% to 0.5% of the total loan amount
- Some sources indicate variations by state and bank
- No universal upper limit for the charges
Important Characteristics
- Who Pays: The borrower pays the MODT charges
- Purpose: Serves as a legal document allowing the lender to hold property title deeds as security
- Calculation: Computed based on the home loan amount
Example Calculation
For a home loan of Rs. 20 lakhs, MODT charges at 0.3% would amount to Rs. 6,000.
Additional Considerations
- Charges may vary slightly between banks
- Some banks like HDFC have recently increased charges to 0.5%
- An additional 18% GST might be applicable on these charges
- The charges are typically paid when the property is registered or upon receiving the initial loan installment
Note: Always confirm the exact MODT charges with your specific bank, as rates can vary by location and individual bank policies.
Also Read: 15 Home Loan Hidden Charges Banks Don’t Tell
How Are MOD Charges Calculated in Karnataka?
MOD charges in Karnataka are determined by several factors:
| Factor | Description |
|---|---|
| Property Value | The charges largely depend on the market value of the property. Higher property values lead to higher MOD charges. |
| Type of Document | The nature of the document, whether it’s a sale deed, lease agreement, or any other legal document, affects the fee structure. |
| Location | The geographical location of the property plays a role. Properties in urban areas typically incur higher MOD charges compared to those in rural locations. |
| Stamp Duty | MOD charges are closely linked to stamp duty. The stamp duty is calculated as a percentage of the property’s market value, directly impacting the MOD charges. |
| Additional Fees | Other administrative charges, such as for expedited processing or extra copies of documents, can also add to the overall cost. |
| Government Policies | Changes in state government regulations or policies may influence the calculation of MOD charges, making it essential to stay updated. |
By considering these factors, you can better estimate the MOD charges for your property transaction and budget accordingly.
Steps to Cancel MOD Deed?
Here are the steps that you need to follow to cancel your MOD deed:
- Obtain NOC: Secure a No Objection Certificate (NOC) from your lender that includes your name, property details, and 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 canceled the MOD 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 MOD?
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 MOD 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 MOD on the Borrowers
The Memorandum of Deposit of Title Deeds (MOD ) 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.
- The bank’s obligation is 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 MOD 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:
- Service charges
- Processing fees
- Stamp duty and Registration fees
Comparison with MOD charges:
- MOD: 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
Conclusion
Understanding MOD charges for home loans is crucial for a smooth 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 MOD charges, visit Credit Dharma.
Frequently Asked Questions [FAQs]
Yes, there may be nominal fees for MOD 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.
MOD 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.
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.
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.
MOD (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.
Yes, signing a Memorandum of Deposit (MOD) is mandatory when obtaining a home loan in India.
This legal document records the lender holding your property’s title deeds as collateral until the loan is fully repaid.
MOD charges, borne by the borrower, typically range from 0.1% to 0.5% of the loan amount, with a maximum cap of Rs. 25,000, depending on state regulations.
Once the loan is repaid, the lender cancels the MOD and returns the title deeds to the borrower.
In Tamil Nadu, MODT charges for home loans include a stamp duty of 0.5% of the loan amount (capped at ₹30,000) and a registration fee of 1% (capped at ₹6,000).
Yes, mod charges (modification charges) can often be negotiated, depending on the lender, type of loan, and circumstances. Borrowers should discuss terms directly with their lender to explore potential reductions or waivers.
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