Paying off your home loan is a significant milestone, but the journey doesn’t end there. The next crucial step is to cancel the Memorandum of Deposit of Title (MODT). This process removes the mortgage lien from your property records, ensuring that officials officially recognize your home as loan-free.
In this guide, we’ll explore everything about MODT cancellation charges, providing you with the knowledge you need to navigate this final phase of your home ownership journey smoothly.
What is a MODT Cancellation Charge?
A lender charges a “MODT Cancellation Charge” to a borrower who has fully repaid their home loan. This fee allows the lender to officially cancel the “Memorandum of Deposit of Title Deed” (MODT), a legal document they used as security for the loan.
Lenders typically charge between 0.2% and 0.5% of the total loan amount as a one-time fee to process the cancellation of the mortgage lien on the property. This fee allows borrowers to regain full ownership rights.
Key points about MODT cancellation charges:
- Purpose: When you take a home loan, you deposit your property title deeds with the lender as collateral, which is documented through a MODT.
Once you repay the loan, you need to cancel this document to regain full ownership of the property. - Charge Variation: The exact MODT cancellation charge can vary depending on the lender, but typically falls between 0.2% and 0.5% of the loan amount, with a potential maximum cap set by the bank.
- Who pays: The borrower is responsible for paying the MODT cancellation charge once the loan is fully repaid.
- Process: After paying off the loan, you need to submit all necessary documents to your lender to initiate the MODT cancellation process, which includes paying the cancellation fee.
- Important Consideration: Always clarify the exact MODT cancellation charges with your lender before taking out a home loan to avoid any surprises later.
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What is MOD/ MODT?
In India, lenders use MOD (Memorandum of Deposit) or MODT (Memorandum of Deposit of Title) as a legal document in the context of home loans. This document is executed between a borrower and a lender, typically a bank or financial institution.
It means you give your property’s documents to the bank as a guarantee that you’ll pay back the loan.
The bank holds onto these documents until you pay off the loan completely. This helps the bank feel secure because if you don’t pay the loan, they can sell your property to get their money back.
Once you finish paying the loan, you need to cancel this document to officially get your property back without any claims from the bank.
Process of MODT Cancellation
Here is the process for MODT (Memorandum of Deposit of Title Deed) cancellation:
- Clear All Outstanding Dues:
Request a loan closure statement from your bank.
Check the total amount due, including principal, interest, and any penalties.
Pay off the loan using NEFT, RTGS, cheque, etc.
Get a receipt confirming your payment. - Submit a Formal Cancellation Request:
Write a letter to your bank’s branch manager including your details, loan number, and property info.
State your intent to cancel the MODT and ask for your original property documents back.
Hand in your letter at the bank or send it by registered mail.
Get a receipt acknowledging your request. - Provide Necessary Documents:
Collect documents like your loan statement (showing a zero balance), payment receipt, and a copy of your cancellation request.
Include copies of your ID and address proof.
Submit these to the bank and get a confirmation of submission. - Pay The Required Cancellation Charges:
Ask the bank for a detailed list of cancellation fees.
Check these against your loan agreement.
Pay the fees through an approved method and get a receipt. - Receive Your Original Property Documents:
Keep in touch with the bank about your cancellation.
Once ready, check and collect your documents from the bank: Property deed, sale deed, property tax receipts, etc.
Sign any forms needed and take your No Objection Certificate (NOC) and other closure documents.
Make copies of all returned documents for your records. - Final Verification:
Confirm that the bank has removed the lien on your property.
Ensure the MODT cancellation is updated in the bank’s records.
If needed, check with the local sub-registrar to make sure the cancellation is officially recorded.
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Bank Wise MODT Cancellation Charges
When securing a housing loan, it’s important to be aware of all related costs, such as the Memorandum of Deposit (MoD) fees.
These fees, which can vary between 0.2% and 0.5% of the total loan amount, are due from the borrower at the time of property registration or upon receiving the initial loan disbursement. The maximum charge is capped at Rs. 25,000, regardless of the total loan amount.
Let’s compare charges across major banks in India for 2024:
| Bank | MODT Cancellation Charges |
| State Bank of India | ₹1,000 – ₹5,000 |
| HDFC Bank | ₹5,000 – ₹10,000 |
| ICICI Bank | ₹5,000 – ₹7,500 |
| Axis Bank | ₹7,500 – ₹10,000 |
| Punjab National Bank | ₹1,500 – ₹5,000 |
Conclusion
MOD cancellation charges process is the final phase that not only marks the end of your loan obligations but also solidifies your complete ownership rights. Taking the time to manage this process carefully will help you avoid any last-minute hurdles and allow you to fully enjoy the peace of mind that comes with true homeownership.
For further guidance or to get started with your home loan journey, visit Credit Dharma today and let us help you achieve your financial goals with confidence.
Frequently Asked Questions
The time required to cancel a MODT can vary depending on the bank and the complexity of your loan case. Generally, it can take a few weeks from the time you submit all necessary documents and make the required payments.
In most cases, you will need to visit the bank at least once to submit the necessary documents for MODT cancellation. However, some banks may offer online or remote options for initiating the process, so it’s best to check with your specific lender.
Documents typically required for MODT cancellation include a loan closure statement, payment confirmation receipt, MODT cancellation request letter, identity proof, and address proof. Ensure you have all documents ready to streamline the process.
Failing to cancel the MODT can lead to complications in the future, such as difficulties in selling the property or obtaining clear legal titles. It’s crucial to complete this step to avoid legal and financial issues related to property ownership.
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