Know What are the Charges for MOD in Home Loan

what is MOD in home loan

Owning a house is a dream of every individual. But it is a massive investment, and general savings often are not enough. Therefore, you need a sizeable home loan to buy a house. When availing of a home loan, you pay accessory costs, such as processing, documentation, legal statement, and property valuation fees. Lenders demand these one-time fees to process the home loan application. 

Besides this, you also pay MOD charges for a home loan. Through this article, you will learn what is mod in a home loan and understand other related aspects.

The Meaning Of MOD In A Home Loan 

Let’s understand what is MOD in home loan? basically, A MOD or Memorandum of Deposit is signed when a lender transfers funds. It is technically a legal document. In most cases, the lending institution drafts the agreement, and the borrower signs it. The home loan may be moved when the purchase price’s first instalment is received or when the property is registered. 

The Memorandum of Deposit states that the institution that furnished the loan is allowed a portion of the property until the debt is fully repaid. It is a safety measure if the borrower fails to make repayments on the loan. The lender then repossesses the property and has the right to auction it off to recover the dues.

The Objective Of MOD In A Home Loan

A MOD is a binding legal document verifying that the lender is the proper owner. Also, it makes it explicit that the borrower has ensured a loan against the collateralised purchase. 

Since the MOD is a registered document, it is reflected in all encumbrance certifications and indicated on the paperwork.

After the loan term, the lending institution must invalidate the MOD when the customer has paid the final payment. It legally changes the title so that the individual purchasing becomes the only owner.

The Charges For MOD In A Home Loan

India revised its real estate rules not long ago. Because of this, every financial institution, including banks and lending organisations carry out MOD before discharging the final part of the loan.

In securing a house loan, the financial institution and the borrower must complete a MOD. In addition to the service charge and other relevant expenses, every lending institution includes MOD fees in the overall cost of house loans.

The borrower is the one who is liable for bearing the MOD charges for the home loan, despite the lending institution that draws and executes it. MOD charges vary across states for a home loan, ranging between 0.1% to 0.5% of the loan amount. However, the slab stays at INR 25,000, regardless of the size of the loan or the type of house.

Ways To Revoke MOD In A Home Loan

When a home loan is paid up, the lending institution seals the MOD and pulls any restriction on the property.

The lender contacts the registrar’s office to schedule a release date, which ensures the revoke of MOD and release of the deficit set on the property. 

Both parties (the lending institution and the property owner) officially announce that all the financial formalities are done, and MOD charges for the home loan have been paid in total.


A Memorandum of Deposit (MOD) is an actual amount paid while taking a home loan. MOD ensures you give your property’s title papers as collateral to the lender for the loan. For any financial institution, MOD is carried as an approach to create accurate confirmation of the right and the lien on a property for the institution from the borrower. 

It is typed out on non-judicial stamp paper. This document can be used if your property is involved in a legal problem. You may have to pay many other charges other than MOD.

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