What Is MODT in Karnataka? Cost, Registration and Release on a Home Loan
Anyone borrowing to buy a home in Karnataka will meet three letters on the paperwork: MODT. MODT, in full, is the Memorandum of Deposit of Title Deeds, which is the registered paper behind a lender's mortgage. Read on for its cost on loans of different sizes, the registration steps, the contrast with sale deed duty and the way it comes to an end.
The Duty and the Fee
Registering the memorandum costs half a percent of the loan in stamp duty. A registration fee is added, and the sub-registrar charges a small scanning fee for every page. The state decides every rupee of it, so banks and housing finance companies cannot differ.
Earlier, the rate was 0.1%, until the 2023 amendment to the Karnataka Stamp Act changed it. The notification raising it to 0.5% was issued on 3 February 2024, and the amendment also lifted the old cap that applied to larger loans. Borrowers of up to Rs. 10 Lakhs pay the same 0.5%, with Rs. 500 as the floor.
Duty tracks the sanctioned loan, never the home's price. These examples show the sums:
- A loan of Rs. 25 Lakhs attracts Rs. 12,500
- A loan of Rs. 50 Lakhs attracts Rs. 25,000
- A loan of Rs. 75 Lakhs attracts Rs. 37,500
- A loan of Rs. 1 Crore attracts Rs. 50,000
Why Lenders Use It
Most Bangalore home loans are secured by depositing the title deeds with the lender. The borrower gives up the original sale deed along with earlier links in the chain, but stays the owner and keeps possession. A written note itemises everything handed across, and that note is the memorandum.
Its text identifies the parties, the sum, the property and the deposited papers. After registration, anyone searching the property's record can find it. For a lender, it is a simpler route than drawing up a full registered mortgage deed, and the charge it creates is just as enforceable.
Sale Deed Charges Are a Different Bill
A common belief is that the sale deed's duty also pays for the mortgage. Each document has charges of its own, and a borrower settles both.
- Sale deed: transfers ownership, and duty and registration follow the property value.
- Memorandum: creates the mortgage, and the charges follow the borrowed sum.
- Priced over Rs. 45 Lakhs, a home attracts sale deed duty of 5.6% including cess and surcharge, plus 2% registration.
- Memorandum charges: 0.5% of the loan as duty, with the registration fee on top.
Take an Rs. 80 Lakhs flat financed by a Rs. 64 Lakhs loan. Duty and registration on the sale deed come to Rs. 6.08 Lakhs, while the memorandum brings Rs. 32,000 of duty and its fee. Lenders do not fund these, so the money comes out of the buyer's savings.
Steps to Registration
The memorandum is prepared by the lender's lawyer after the sale deed has been registered and its original is available. Payment is made online on the Kaveri system. Finally, the borrower and a lender's representative complete the formalities in person. Under the Registration Act, a document must be presented within four months of signing, although lenders seldom wait that long.
If the flat is under construction, no title deed exists until the sale deed is registered. The deposit is accordingly recorded only at that point. Some lenders collect the MODT amount with their other fees and pay it for the borrower, whereas others expect the borrower to pay directly. Look in the sanction letter or Key Facts Statement for the answer, to avoid budgeting the charge twice.
How the Entry Shows Up Later
Once registered, the memorandum appears in the property's encumbrance certificate, naming the lender. In addition, the lender files the mortgage on CERSAI, the central security-interest registry. Anyone who checks the property later will therefore see that it is mortgaged.
That matters when the property is sold. Lawyers acting for a purchaser will ask for evidence that an open entry has been repaid and discharged. Sellers still paying a loan should arrange closure and release ahead of signing.
Moving the Loan to Another Lender
A balance transfer means paying again. One lender lets go of its mortgage; the incoming lender registers a new memorandum covering its loan. For an outstanding balance of Rs. 60 Lakhs, the stamp duty alone is Rs. 30,000.
Count it in the break-even maths, alongside the incoming lender's processing fee. Topping up a loan could call for another deposit to cover the added sum. Ask for the fee sheet before accepting an offer.
Closing the Loan
Paying the last instalment does not remove the entry on its own. Next come the original deeds and a no-dues certificate from the lender, followed by registration of the mortgage release. The RBI's deadline for returning documents and removing registered charges is 30 days from full repayment.
At closure, a borrower should check three things:
- All the originals named in the memorandum are back in hand
- A new encumbrance certificate carries the discharge entry
- CERSAI marks the charge as satisfied
The state refunds nothing paid on the memorandum. Count it as a one-time cost of borrowing in the purchase budget.
Planning the Cash
Because the rate is fixed, the only step is to plan early. The duty is known the moment the likely loan is known. Add it to the cash that must be ready before disbursement, along with what the sale deed and the lender will cost. A quote far above half a percent of the loan deserves questions, and registration and scanning charges ought to be itemised.
The EMI calculator estimates the upfront cash for any price and loan. For any project in Bangalore, ask us for the cost sheet and these charges will be planned with the price.
