What is MOD in Home Loan? Meaning, Charges, Process & Importance
If you are taking a home loan, you may hear the term MOD during loan disbursement or registration. Many borrowers get confused and think MOD is an extra tax or unnecessary charge. In reality, MOD plays a critical legal role in home loans.
This detailed guide explains what is MOD in home loan, its meaning, charges, registration process, documents required, and why it is important for banks and borrowers.
What Is MOD in Home Loan?
· MOD refers to the Memorandum of Deposit of Title Deeds.
· In simple words, MOD is a legal document through which a borrower deposits property title deeds with the bank to create a mortgage against the home loan.
It acts as proof that the property is pledged to the bank until the home loan is fully repaid.
Why is a Memorandum of Deposit (MOD) required in a home loan?
· Banks and financial institutions require MOD to:
- Create a legal charge on the property
- Secure the loan against the property
- Protect the bank’s interest
- Prevent the property from being sold without loan clearance
Without MOD, the bank cannot legally claim rights over the property.
How MOD Works in Home Loan
Here’s how the MOD process works:
- You apply for a home loan
- Bank approves the loan
- Property documents are verified
- You submit original title deeds to the bank
- MOD is registered at the sub-registrar office
- Loan amount is disbursed
The bank keeps the original documents until the loan is closed.
Is MOD Registration Mandatory?
Yes, MOD registration is mandatory in most Indian states.
Once registered:
- The mortgage becomes legally valid
- The bank’s charge is recorded in government records
Some states may allow equitable mortgage, but even then MOD intimation is required.
MOD Charges in Home Loan
MOD charges vary by state and loan amount.
Typical MOD Charges in India
| Item | Approximate Cost |
| MOD Registration Fee | 0.1% – 0.5% of loan amount |
| Stamp Duty on MOD | ₹100 – ₹5,000 (state-wise) |
| Registration Charges | ₹500 – ₹2,000 |
👉 Charges are much lower than full sale deed registration.
Who Pays MOD Charges?
- Borrower pays MOD charges
- Banks do not bear these costs
- Charges are paid at the time of loan disbursement
Always check state-specific rates before registration.
Documents Required for MOD Registration
Borrower Documents
- Aadhaar Card
- PAN Card
- Address proof
Property Documents
- Sale deed
- Previous title deeds
- Property tax receipt
- Encumbrance Certificate
Bank Documents
- Loan sanction letter
- MOD format provided by bank
Where Is MOD Registered?
MOD is registered at the Sub-Registrar Office (SRO) where the property is located.
In many states, appointment booking is done online through IGRS portals.
Difference Between MOD and Sale Deed
| Feature | MOD | Sale Deed |
| Purpose | Create mortgage | Transfer ownership |
| Ownership | Remains with borrower | Transfers to buyer |
| Registration Cost | Low | High |
| Validity | Till loan closure | Permanent |
MOD does not transfer ownership, it only creates a charge.
What Happens to MOD After Loan Closure?
Once the home loan is fully repaid:
- Bank issues Loan Closure Letter
- Bank returns original documents
- MOD is released or cancelled
- Bank issues No Dues Certificate
This step is crucial to remove the bank’s charge from records.
What If MOD Is Not Cancelled?
If MOD is not cancelled:
- Property sale may get delayed
- Legal complications may arise
- Buyers and banks may reject the property
👉 Always complete MOD release after loan closure.
Is MOD Required for Loan Against Property (LAP)?
Yes. MOD is required for both Home Loans and Loan Against Property (LAP).
Any loan secured against property needs a registered mortgage.
Common Myths About MOD
❌ MOD is extra tax – False
❌ MOD transfers ownership – False
❌ MOD is optional – False
❌ MOD charges are refundable – False
Tips for Borrowers Regarding MOD
- Ask bank for exact MOD charges
- Confirm state-wise stamp duty
- Keep MOD receipt safely
- Ensure MOD release after loan closure
- Match property details carefully
Final Thoughts
MOD in home loan is a crucial legal process that protects both the bank and the borrower. While it involves some cost, it ensures transparency, legal safety, and proper mortgage creation.
Before taking a home loan:
- Understand MOD charges
- Verify property documents
- Complete MOD registration properly
A clear MOD process ensures smooth loan disbursement and stress-free property ownership.
Explore more guides at Bhulekh India.
FAQs
MOD means Memorandum of Deposit of Title Deeds, a document used to create a mortgage.
Yes, MOD is compulsory in most states to legally secure the loan.
The borrower pays all MOD-related charges.
No, MOD charges are non-refundable.
No, you must close the loan and cancel MOD first.
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