The MOD is a vital part of the home loan process, ensuring legal and financial security for both borrowers and lenders. By understanding its nuances, you can navigate your home loan journey smoothly and confidently.
Full Form of MOD
MOD stands for Memorandum of Deposit of Title Deed. This legal document serves as proof that the borrower has deposited the property’s title deed with the lender, such as a financial institution, as collateral.
How MOD Works in Home Loans?
Role of MOD in Loan Approval
When you apply for a home loan, the lender requires collateral to secure the loan. The MOD legally ties the property to the loan, making it an essential step in the approval process.
Registration Process of MOD
Once the lender approves the loan, the MOD must be registered at the sub-registrar’s office. This registration includes paying stamp duty and creates a public record of the agreement, ensuring transparency.
Benefits of MOD in Home Loans
Simplified Loan Disbursement With a registered MOD, lenders can disburse the loan amount more quickly since the property’s legal status is already verified.
Enhanced Legal Protection
The MOD safeguards the lender’s interests, ensuring that the borrower cannot sell or transfer the property without consent terms agreed upon in the loan.
Lower Risks for Lenders and Borrowers
The legal clarity provided by the MOD reduces the risks of disputes, benefiting both parties in the long run.
Costs Involved in MOD
MOD Charges
State-Specific MOD Charges
The MOD (Margin of Deposit) charges in banks vary depending on the bank’s policies and guidelines. These charges typically apply when a customer uses their fixed deposit (FD) as collateral for loans or overdraft facilities.
1. State Bank of India (SBI):
• Charges: ₹500 + GST (approx).
• Purpose: For lien marking and releasing of FDs.
• Details:
o Applicable for both loans against deposits and overdraft facilities.
o Separate charges may apply for lien modification or multiple lien marking.
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2. HDFC Bank:
• Charges: ₹300–₹500 + GST (approx).
• Purpose: For MOD creation, lien marking, or cancellation.
• Details:
o The charges depend on the number of modifications and the amount involved.
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3. ICICI Bank:
• Charges: ₹200–₹500 + GST (approx).
• Purpose: For lien marking or FD as security.
• Details:
o MOD charges are deducted directly from the FD or the linked savings account.
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4. Axis Bank:
• Charges: ₹250–₹500 + GST (approx).
• Purpose: For creating and releasing MODs.
• Details:
o Fees may vary for corporate and retail customers.
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5. Punjab National Bank (PNB):
• Charges: ₹300–₹500 + GST (approx).
• Purpose: For creating a lien or modification of a deposit.
• Details:
o Charges may be higher for larger deposits or multiple MOD creations.
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6. Bank of Baroda (BoB):
• Charges: ₹200–₹500 + GST (approx).
• Purpose: MOD lien marking and release.
• Details:
o For FDs used as security for loans or overdrafts.
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7. Canara Bank:
• Charges: ₹300–₹400 + GST (approx).
• Purpose: For MOD lien marking.
• Details:
o Applicable charges depend on the type of deposit and loan facility availed.
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8. Union Bank of India:
• Charges: ₹200–₹500 + GST (approx).
• Purpose: Lien creation and modification.
• Details:
o MOD charges depend on the branch and the type of account.
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9. Kotak Mahindra Bank:
• Charges: ₹300–₹500 + GST (approx).
• Purpose: For lien marking and removal.
• Details:
o Specific charges for corporate and personal banking customers.
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10. Federal Bank:
• Charges: ₹300–₹500 + GST (approx).
• Purpose: MOD creation, lien marking, and lien removal.
• Details:
o Charges may be slightly higher for corporate FDs.
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General Guidelines for MOD Charges:
1. Negotiable: In some cases, charges can be waived or reduced based on the customer’s relationship with the bank.
2. GST: Most banks apply GST on these charges, increasing the overall cost.
3. Documentation: MOD charges often include administrative costs for creating or modifying lien agreements.
MOD charges, including stamp duty, vary across states in India. They typically range between 0.1% and 0.5% of the loan amount, subject to state regulations.
Who Bears the Cost of MOD?
Usually, borrowers pay the MOD charges. However, some lenders may include these charges in the loan amount, making it easier for the borrower to manage.
MOD vs Mortgage Agreement
Key Differences
While both MOD and mortgage agreements serve as collateral mechanisms, the MOD is simpler and more cost-effective since it involves only the deposit of title deeds without transferring property rights. Other mechanisms, like hypothecation, can also be considered in some cases.
Which One is Better?
For most borrowers, the MOD is preferable due to its lower cost and straightforward process.
Legal Aspects of MOD in Home Loans
MOD and Property Ownership
Even with an MOD in place, the property’s ownership remains with the borrower. However, the borrower cannot sell or transfer the property without the lender’s consent.
Cancellation of MOD After Loan Repayment
Once the borrower repays the loan, the lender issues a no-objection certificate (NOC), and the MOD is cancelled at the sub-registrar’s office.
Steps to Register MOD
Document Checklist
Property title deed
Loan sanction letter
Borrower’s ID proof
Address proof
Bank’s MOD request letter
Registration Process Overview
Role of the Sub-Registrar Office
The sub-registrar’s office verifies the documents, ensures compliance with legal norms, and registers the MOD, making it legally binding.
Common Misconceptions About MOD
MOD as an Additional Loan Expense
Many borrowers mistakenly view MOD as an unnecessary cost. However, it is a crucial legal safeguard.
Impact of the MOD on Credit Score
The MOD does not directly impact your credit score. However, timely loan repayment positively affects your creditworthiness.
Practical Tips for Home Loan Borrowers
Understanding MOD Before Signing
Read the MOD terms carefully. Ensure you understand its implications on your property and loan.
Negotiating MOD Charges
Discuss MOD charges with your lender. Some banks may offer concessions or include these costs in the loan amount.
Verifying MOD Cancellation
After loan repayment, confirm the MOD cancellation. This ensures there are no legal ties between the lender and your property.
Key Features of MOD Registration Charges:
• Purpose: For registering the mortgage (not applicable for FDs but for properties).
• Amount: Varies by State, as it is governed by state stamp duty and registration laws.
• Components: Includes stamp duty and registration fees.
How Are MOD Registration Charges Different?
Aspect MOD Registration Charges MOD Lien Charges
Purpose For property mortgages For lien marking on Fixed Deposits (FDs)
Applicable to Property loans (e.g., home loans) Loans/overdrafts against FDs regulation State laws (stamp duty, registration) bank policy charges based on the loan amount (usually a percentage)
Flat fee (₹200–₹500 + GST approx.)
MOD Registration Charges in Various States (India):
The charges vary significantly depending on the State where the property is located. For Example:
NOI (Notice of Intimation) and MOD (Memorandum of Deposit) charges State wise
1. Maharashtra
• NOI Charges:
o Stamp Duty: ₹1,000 (fixed) or 0.1% of the loan amount above ₹10 lakh.
o Registration Fee: ₹300–₹1,000.
• MOD Charges:
o Stamp Duty: ₹1,000 (fixed).
o Registration Fee: ₹300–₹1,000.
• Note: NOI is mandatory under the Maharashtra Registration Act, 2010.
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2. Karnataka
• MOD Charges:
o Stamp Duty: 0.1% of the loan amount, capped at ₹50,000.
o Registration Fee: ₹500–₹1,000.
• Note: NOI is not required; only MOD registration is necessary.
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3. Tamil Nadu
• MOD Charges:
o Stamp Duty: 0.25% of the loan amount.
o Registration Fee: ₹1,000.
• Note: NOI is not applicable; MOD registration suffices.
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4. Telangana & Andhra Pradesh
• MOD Charges:
o Stamp Duty: 0.1% of the loan amount.
o Registration Fee: ₹1,000–₹2,000.
• Note: NOI is not applicable here.
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5. Gujarat
• MOD Charges:
o Stamp Duty: ₹100 fixed for loans up to ₹5 lahks or 0.1% of the loan amount above ₹5 lahks.
o Registration Fee: ₹500–₹1,000.
• Note: NOI is not required.
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6. Rajasthan
• MOD Charges:
o Stamp Duty: 0.15% of the loan amount.
o Registration Fee: ₹500–₹1,000.
• Note: NOI is not mandatory.
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7. Punjab & Haryana
• MOD Charges:
o Stamp Duty: ₹100–₹200 (nominal flat charge).
o Registration Fee: ₹500–₹1,000.
• Note: Only MOD is required.
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8. West Bengal
• MOD Charges:
o Stamp Duty: 0.2% of the loan amount, capped at ₹50,000.
o Registration Fee: ₹1,000.
• Note: NOI is not applicable.
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9. Uttar Pradesh
• MOD Charges:
o Stamp Duty: 0.1% of the loan amount, capped at ₹25,000.
o Registration Fee: ₹500–₹1,000.
• Note: NOI is not required.
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10. Delhi
• MOD Charges:
o Stamp Duty: ₹200–₹500 (nominal).
o Registration Fee: ₹500–₹1,000.
• Note: NOI is not applicable.
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11. Madhya Pradesh
• MOD Charges:
o Stamp Duty: ₹1,000 fixed for loans up to ₹10 lahks or 0.1% of the loan amount above ₹10 lahks.
o Registration Fee: ₹1,000.
• Note: NOI is not applicable.
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12. Kerala
• MOD Charges:
o Stamp Duty: 0.1% of the loan amount, capped at ₹10,000.
o Registration Fee: ₹500–₹1,000.
• Note: NOI is not required.
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13. Bihar
• MOD Charges:
o Stamp Duty: ₹200 flat.
o Registration Fee: ₹500.
• Note: NOI is not applicable.
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Key Observations Across States:
1. NOI Applicability:
o Required only in Maharashtra (as per the Maharashtra Registration Act, 2010).
o Not mandatory in other states.
2. MOD Charges:
o Stamp Duty ranges between 0.1%–0.25% of the loan amount in most states.
o Registration Fee is usually ₹500–₹1,000.
Key Differences in Context
• MOD lien charges are internal bank fees applicable to FDs used as collateral.
• MOD registration charges involve legal processes when securing loans using immovable property as collateral.
Difference Between NOI and MOD in Maharashtra
| Aspect | NOI | MOD |
|---|
| Purpose | Notify about a property mortgage. | Create a lien on the property. |
| Filing Requirement | Mandatory in Maharashtra. | Mandatory in all states. |
| Charges | ₹1,000–₹2,000 + Stamp Duty. | ₹2,000–₹5,000 or as per state norms. |
| Filing Timeline | Within 30 days of loan disbursement. | Done at the time of loan disbursement. |
| Regulated by | Registration Act, 1908. | Registration Act, 1908. |
NOI (Notice of Intimation) Charge
The NOI (Notice of Intimation) charge in a home loan is different from MOD registration charges and MOD lien charges. Here’s an explanation to help clarify:
1. What Are NOI Charges?
• Notice of Intimation (NOI) is a legal requirement under the Registration Act, 1908, in certain states (e.g., Maharashtra) when a property is mortgaged for a home loan.
• The purpose of NOI is to notify the government authorities about the creation of a mortgage to ensure transparency and prevent multiple loans on the same property.
2. Features of NOI Charges:
• Applicability: Required in specific states, such as Maharashtra, to formally notify about a property mortgage.
• Charges: Includes a nominal fee for:
o Stamp Duty (fixed or a percentage of the loan amount).
o Registration Fee (fixed nominal amount).
• Process:
o Banks submit the NOI on behalf of the borrower.
o It must be filed within 30 days of loan disbursement.
Difference Between NOI Charges, MOD Charges, and MOD Registration Charges:
| Aspect | NOI Charges | MOD Registration Charges | MOD Lien Charges |
|---|
| Purpose | Notify the government about a property mortgage. | Register the mortgage officially. | Marking lien on Fixed Deposits (FDs). |
| Applicable to | Home loans (in certain states like Maharashtra). | Home loans (all states). | Loans/overdrafts against FDs. |
| Regulated by | Registration Act, 1908 (state-specific rules). | Registration Act, 1908. | Bank policies. |
| Cost | ₹1,000–₹2,000 (approx) + Stamp Duty. | ₹2,000–₹5,000 or a percentage of the loan. | ₹200–₹500 (approx) |
4. NOI Charges in Maharashtra (Example):
Components of NOI Charges:
1. Stamp Duty:
o ₹1,000 (fixed) for loans up to ₹10 lakh.
o 0.1% of the loan amount for loans above ₹10 lakh.
2. Registration Fee:
o ₹300–₹1,000 depending on the loan amount.
How to File NOI?
• Step 1: Loan is sanctioned, and documents are prepared.
• Step 2: Bank or borrower files NOI at the SRO using property details and loan information.
• Step 3: SRO issues an acknowledgement confirming the mortgage notification.
Documents Required:
• Loan sanction letter.
• Property documents (e.g., sale deed).
• ID and address proof of the borrower.
• Loan agreement.
When Are NOI Charges Necessary?
• Mandatory in states like Maharashtra to prevent property fraud.
• Not required in all states, as some only require MOD registration charges.
What Is Notice of Intimation (NOI)?
• Purpose: NOI is a legal notification to the Sub-Registrar Office (SRO) stating that a property has been mortgaged for a home loan.
• States Requiring NOI: Maharashtra is a prime example where filing an NOI is mandatory under the Registration Act of 1908.
• Timeline: NOI must be filed within 30 days of loan disbursement.
• Why It’s Important: It helps prevent property fraud and ensures that no duplicate loans are taken against the same property.
What Is a Memorandum of Deposit (MOD)?
• Purpose: MOD is a legal document stating that the borrower has deposited the title deeds with the lender as security for the loan.
• Applicability: Mandatory in all states for property loans.
• When Required: Upon disbursal of the loan, create a lien on the property.
Which States Require NOI?
As of now, only Maharashtra has a mandatory requirement for NOI filing under the Maharashtra Registration (Amendment) Act, 2010. Most other states only require MOD registration.
Penalties for Non-Compliance:
• Failure to file NOI within the stipulated 30 days can result in:
o Legal issues with the mortgage.
o Ineligibility for claims in case of disputes.
o Additional fines or charges by the bank.
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Key Takeaway:
• NOI is a state-specific requirement, and its charges vary based on the loan amount.
• MOD registration is a nationwide process and involves higher charges than NOI in most cases.
Detailed Step-by-Step Filing Process for NOI
A. Filing Process for NOI (Notice of Intimation)
Applicable in states like Maharashtra.
1. Loan Disbursement:
o After loan sanction, the lender provides necessary documents (e.g., loan agreement, sanction letter).
2. Prepare NOI Documents:
o Gather property and loan-related documents (details in the checklist below).
o Ensure correct details about the property and loan are included.
3. Visit Sub-Registrar Office (SRO):
o The borrower or bank representative must visit the SRO where the property is registered.
4. Submission of NOI:
o Submit the NOI form along with supporting documents.
o Pay the applicable stamp duty and registration charges (discussed below).
5. Verification:
o The Sub-Registrar verifies the details and documents.
6. Acknowledgment:
o An acknowledgement receipt is issued by the SRO, confirming the mortgage notification.
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B. Filing Process for MOD (Memorandum of Deposit)
Applicable nationwide.
1. Loan Approval and Document Creation:
o Once the loan is approved, the bank prepares the MOD document.
2. Stamp Duty Payment:
o Stamp duty is paid as per the State’s guidelines. This can often be done online.
3. Visit Sub-Registrar Office (SRO):
o The borrower or bank representative must visit the SRO to file the MOD.
4. Document Submission:
o Submit the MOD document along with the required property and loan documents.
5. Verification and Registration:
o The Sub-Registrar verifies the documents and registers the lien on the property.
6. Acknowledgment:
o The SRO issues an acknowledgement confirming the MOD registration.
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3. Documentation Checklist
For NOI Filing:
1. Loan Documents:
o Loan sanction letter.
o Loan agreement.
2. Property Documents:
o Sale deed or title deed.
o Property card (if applicable).
3. Personal Documents:
o Aadhaar card or PAN card for identity proof.
o Address proof (electricity bill, passport, etc.).
4. Other Documents:
o Property tax receipts.
o Copy of property registration details.
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Important Notes:
1. Timelines: NOI must be filed within 30 days of loan disbursement, while MOD is typically done during the disbursement process.
2. Penalties: Failure to comply with NOI/MOD requirements may result in additional fines or legal complications.
3. Bank Assistance: Banks often handle the process of filing NOI and MOD on behalf of the borrower, but you may need to visit the SRO in person.
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General Process for MOD in All States:
1. Bank Prepares MOD Document: The bank creates the Memorandum of Deposit document during loan disbursement.
2. Stamp Duty Payment: Paid online or at the Sub-Registrar Office (SRO).
3. MOD Registration: Borrower or bank files the MOD at the SRO.
4. Acknowledgment: The SRO issues a receipt confirming the lien creation.
FAQs
What is the full form of MOD in home loans?
MOD stands for Memorandum of Deposit of Title Deed.
Are MOD charges refundable?
No, MOD charges are non-refundable as they are paid for the legal registration process.
How does MOD affect property ownership?
MOD does not change property ownership but restricts its sale or transfer without lender approval.
Can MOD charges be included in the loan amount?
Yes, some lenders allow MOD charges, including stamp duty, to be included in the loan amount.
Is MOD mandatory for all home loans?
While not mandatory for every loan, most lenders require an MOD for added legal security.