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What is MOD in Home Loan? Is it Mandatory?

Nov 01, 2022
What is MOD in Home Loan? Is it Mandatory

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 meaning the memorandum of deposit of title deeds, 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.

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.

Bottom Line

An MOD home loan has many advantages over registered mortgages. For instance, the stamp duty and other charges can be as low as 0.1% of the home loan amount. While, in the case of registered mortgages, the rates and charges are much higher.

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 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.


*Terms and Conditions apply. Loans are disbursed at the discretion of Fullerton Grihashakti.

Fullerton India Home Finance Company Ltd
CIN number: U65922TN2010PLC076972
IRDAI COR No: CA0492

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