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What is MOD in Home Loan? Is it Mandatory?

Nov 01, 2022
what is mod in home loan

While applying for a home loan, you must have noticed that the lender asks you to submit a lot of documents related to your house property and sign a few undertakings, including MOD.

MOD full form in home loan is "Memorandum of Deposit", and is also sometimes referred to as memorandum deed of your house property. Let’s check what is MOD, and its significance in home loans.

What is MOD in Home Loan?

Signing the Memorandum of Deposit of title deed is crucial in the entire home loan disbursal process.

It is an undertaking given by the home loan borrower stating that the depositor has deposited the title deeds of the property with the lender.

The MOD clearly states that the lender is entitled to a share in the property until the loan is repaid in full.

Home loan in india, it is mandatory to deposit all your property documents that prove your ownership to the lender. The MOD gives lenders the right to repossess the pledged property in case the borrower defaults on the home loan.

What are MOD charges for home loans?

The Memorandum of Deposit (MOD) is a fee you must pay when qualifying for a house loan. MOD charges for home loans might vary based on the lender and the parameters of the loan. This MOD is required to confirm that you have placed the title deed to your property with the lending institution as loan collateral. MOD charges for home loan vary according to your state of residence or property, and are often in the range of 0.1% to 0.5% of the home loan principal amount. The MOD serves as a legally binding agreement between the lender and the borrower and outlines the terms and conditions of the loan, including the amount of the deposit, the interest rate, and the repayment schedule.

MOD charges for home loans might vary based on the lender and the parameters of the loan. This MOD is required to confirm that you have placed the title deed to your property with the lending institution as loan collateral.

MOD charges for home loans vary according to your state of residence or property, and are often in the range of “0.1% to 0.5%” of the home loan principal amount.

The MOD serves as a legally binding agreement between the lender and the borrower and outlines the terms and conditions of the loan, including the amount of the deposit, the interest rate, and the repayment schedule.

How MOD is Cancelled?

Once the loan has been repaid in full, the lender has to cancel the MOD and free the property from lien. An official from the lender will visit the registration office and make a release deed, confirming the registration department to release the MOD and lifting the lien on the property.

In the release deed and NOC, ensure that the property address is correct, there is no claim on the property by the lender, and that it is mentioned that all dues have been paid in full.

Why is an MOD Necessary When You Take A Home Loan?

The MOD documents that the lender can repossess the property in case of default, and has the right to auction it off in order to recover their dues in such an event.

It is done to reduce the risk of loss for the lender.

Advantages of MOD home loan

A memorandum of deposit (MOD) is a document that is used in home loan financing to record the deposit of money or other assets as collateral for the loan. It is typically used in situations where the borrower has limited financial resources or a poor credit history, and the lender requires additional security in order to approve the loan.

An MOD in a home loan is considered to have various advantages over registered mortgages. To begin with, it removes the possibility of fraud in the house financing procedure. Aside from that, the total amount to be paid for stamp duty and other such costs could be as low as 0.1% of the loan amount.

Furthermore, because the lender transfers the property to the legitimate owner following debt settlement, the owner is not required to go through any form of registration process. The deposit is typically held in escrow by a third party, and is returned to the borrower after the loan is repaid in full.

Bottom Line

Furthermore, because the lender transfers the property to the legitimate owner following debt settlement, the owner is not required to go through any form of registration process. The deposit is typically held in escrow by a third party, and is returned to the borrower after the loan is repaid in full.

The title deed can be easily secured after making the home loan payment and no registration process is required when the property is handed to you by the lender. Furthermore, it eliminates the chances of home loan scams, which can ruin your home buying experience.

Therefore, before applying for a home loan, check the MOD for the title deed process with the lender and the charges involved.

Please note that this article is for your information only. Loans at SMFG Grihashakti are disbursed as per our policy at the time of loan application. List of documents for a home loan may vary depending on the applicant’s profile and our policy. Please apply online today or contact us to know the complete list of documents required for a home loan.

FAQ's

Who will pay MOD charges?

The borrower has to take up the responsibility of paying the MOD charges.

What is a MOD agreement?

A MOD agreement states that in the case of a home loan being borrowed, the lender has the right to repossess the property in case of default. The lender also has the right to auction it off so as to recover their dues.

Is MOD on home loan mandatory?

Yes, signing a MOD agreement is mandatory during a home loan as it proves the ownership to the lender. It is the Memorandum of Deposit of Title Deeds.

Are MODs refundable?

No, the MOD charges are not refundable. Upon cancellation of the MOD, that happens once the entire loan amount is repaid, there is a declaration that the entire possession is handed over to the borrower, but the charges are not refunded.

How are MOD charges calculated?

MOD charges are fixed by the lending institution to be a certain percentage of the total loan amount sanctioned.


Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.

SMFG India Home Finance Co. Ltd. (Formerly Fullerton India Home Finance Co. Ltd.)
CIN number: U65922TN2010PLC076972
IRDAI COR No: CA0948

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