Buying your dream home by taking a home loan is a highly beneficial process, but it also comes with certain keywords or terms that you may find difficult to understand. One of these terms in MOD. Here is an overview of what MOD means and how it is relevant in home loans!
What is MOD?
MOD full form in home loan is Memorandum of Deposit which is also called the mortgage deed of the property. It is a legal document that is proof of the home purchase amount handed over by the home loan provider or financial institution to the builder or seller of the property.The legal document comes into existence when the property purchase is being registered or when a part-payment of the home loan is made to the seller. This MOD document becomes an integral part of all kinds of financial encumbrances and certificates related to the bought property.
What are MOD Charges?
MOD represents the clause that till the time the borrower or homeowner doesn’t pay all the prescribed EMIs of the home loan, the financial institution has a right to a part of the property purchased. Normally online home loan providers take out the MOD before the full and final payment is made to the seller. This also invites a charge ranging between 0.1% – 0.5% of the loan amount, which should be paid by the homeowner. The highest slab of MOD charges, as authorized by the Central Bank, is Rs. 25000.
What Happens to MOD when the Home Loan Has been Fully Paid?
In the event of a full repayment towards the home loan, the financial institution that carried out the MOD in the first place cancels the legal document. There will be a registered notice that the entire amount has been repaid by the homeowner, and there are no dues towards the home loan provider. This leads to the termination of MOD.
Benefits of applying for a MOD home loan
Applying for a MOD Home Loan has several benefits for homeowners:
Compared to MOD home loans, registered home loans may offer subsidized charges like stamp duty feel, but the interest rate can be higher. MOD Home loans benefit you from a lower interest charge on your online home loan.
Homeowners can get the property title deed in their name as soon as the MOD is terminated and the home loan has been fully paid.
They also get the benefit of not going through any additional registration of the property since the financial institution has already completed it.
MOD home loans also lower your risk of applying for home loans.
Is it compulsory to get a MOD Home Loan?
MOD Home loan, also called the memorandum deed of the property you are investing in, is a document that protects the home loan provider. Any financial institution paying the builder or seller of the property on behalf of the homeowner will keep its money safe until the time the homeowner fully pays it.This means that financial institutions can officially claim ownership rights on the property if the homeowner defaults on EMIs or home loan amounts. Although the home loan provider carries out the MOD to protect its money, it is eventually signed and attested by the homeowner. Thus, this legal document has become compulsory across India, wherever a home loan is processed.
Conclusion
MOD home loans are a popular way of protecting the rights and finances of the home loan provider. If the payment has been processed on behalf of the homeowner, the financial institution will keep its side safe and secure against any unforeseen losses, fraud, or missed EMIs through a MOD. It is a fact that when applying for online home loans, the homeowner has to go through several rituals, documentation, approvals, verification, charges, and proceedings. But if you know every legal term and process involved in a home loan, it becomes a hassle-free and convenient process. The bottom line is that home loans materialize your dream of owning your home. So even if you have to go through a few formalities, you must take it as part of the process and fulfil it diligently!