While applying for a Home Loan, you must have noticed that the lender asks you to submit many documents related to your house property and sign a few undertakings, including MOD. MOD full form in Home Loan is ‘Memorandum of Deposit’. It is also sometimes called as a memorandum of your house property. Let us check what MOD is and its significance in Home Loans.
Signing the Memorandum of Deposit of the title deed is crucial in the Home Loan disbursal process. After knowing the MOD full form, note that it is an undertaking given by the Home Loan borrower stating that the depositor has deposited the title deeds of the property with the lending firm. The MOD clearly states that the lender is entitled to a share of the property until the Loan is repaid in full.
How to get a Home Loan in India?
To obtain a Home Loan in India, it is mandatory to deposit all property documents that prove ownership to the lender. The MOD gives lenders the right to repossess the pledged property if the borrower defaults on their Home Loan repayment. It is a fee you must pay when qualifying for a House Loan. The charges might vary depending on the lender and the Loan parameters.
This MOD must confirm that you have placed the title deed on 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. It is a legally binding agreement between the lender and the borrower. It outlines the terms and conditions of the Loan, including the amount of the deposit, the interest rate, and the repayment schedule.
Why is it necessary when you apply for a Home Loan?
The MOD documents that the lender can repossess the property in the event of default and has the right to auction it off to recover its dues. It reduces the lender’s risk of loss. A memorandum of deposit is a document used in Home Loan financing to record the deposit of money or other assets as collateral for the Loan.
It is typically used when the borrower has limited financial resources and a poor credit history, or the lender requires additional security to approve the Loan.
Conclusion
Knowing the MOD full form is advantageous for borrowers, as it eliminates the possibility of fraud in the home financing process. Besides, the total amount to be paid for stamp duty and other such costs could be as low as 0.1% of the Loan amount. Since the lender transfers the property to the legitimate owner following debt settlement, they are not required to undergo registration processes.
The deposit is typically held in escrow by a third party and returned to the borrower after full Loan repayment.
