MODT Explained: The Mortgage Registration Cost on Karnataka Home Loans
The first bill that surprises many first-time borrowers is not the loan itself but a registration called MODT. In Karnataka it records the lender's hold on the property you are buying. What follows is a plain account of the charge, a worked example, the steps to register it and what happens to it if the loan moves or ends.
A Worked Example
Suppose a buyer picks an Rs. 80 Lakhs flat and borrows Rs. 64 Lakhs. The sale deed carries duty and registration of Rs. 6.08 Lakhs, calculated on the full price. The mortgage adds Rs. 32,000 of stamp duty, which is half a percent of the loan, plus its own registration fee.
The lender funds neither amount. Both are met from the buyer's savings, together with the down payment. Keep this example in mind for the sections that follow.
What the Letters Stand For
The letters stand for Memorandum of Deposit of Title Deeds. The lender keeps the original sale deed and the earlier papers as security. Meanwhile the borrower carries on owning and living in the home. A short written memorandum puts this arrangement on record.
The document spells out who the parties are, how much was lent, which property is involved and what papers were left. Once registered, it becomes a matter of public record. Compared with drawing up a full mortgage deed, lenders find it easier, and the charge it creates lasts to the final instalment.
How the Rate Is Set
Stamp duty works out at 0.5% of the sanctioned loan, with a registration fee going along with it. The office also bills a scanning fee page by page. Because the state fixes these figures, no bank or finance company can charge more or less.
The earlier rate was 0.1%. A 3 February 2024 notification under the 2023 amendment to the Karnataka Stamp Act raised it to 0.5%, and bigger loans lost the ceiling that once limited their duty. Small loans, up to and including Rs. 10 Lakhs, pay 0.5% too, with a floor of Rs. 500.
Here is how the duty looks across loan sizes:
| Duty | Loan |
|---|---|
| Rs. 10,000 | Rs. 20 Lakhs |
| Rs. 22,500 | Rs. 45 Lakhs |
| Rs. 35,000 | Rs. 70 Lakhs |
| Rs. 45,000 | Rs. 90 Lakhs |
Two Documents, Two Charges
A borrower often assumes one payment of duty settles everything. In fact the sale deed and the memorandum are separate. The first transfers ownership, with charges on the value of the property: for a property priced over Rs. 45 Lakhs, that means 5.6% duty including cess and surcharge, and 2% registration. The second creates the mortgage, with charges on the amount borrowed.
Registering the Memorandum
A lawyer acting for the lender drafts the memorandum after the sale deed has been registered and the original is in hand. Duty and fee are paid on the state's Kaveri portal. Both the borrower and the lender's representative then appear before the sub-registrar.
The Registration Act allows four months from signing to present a document, though lenders rarely use all of it. They want security in place by the time money is released. If the project is still being built, a title deed comes into being only with the sale deed's registration, so that is when the deposit is recorded.
Practice differs on who pays the state. A few lenders fold the amount into their fees and pay for the borrower; others make the borrower pay directly. The sanction letter or the Key Facts Statement will say, and reading it prevents a double payment.
What Future Buyers Will See
After registration, the encumbrance certificate for the property carries an entry for the memorandum, with the lender's name. The lender additionally files details with CERSAI, which is the central registry of security interests. On resale, an open entry makes a buyer's lawyer ask for proof that it has been cleared. A seller with a loan still running should plan the closure and the release before signing the sale deed.
If You Switch Lenders
A balance transfer starts the cycle again. The first lender gives up its mortgage, and the second lodges a memorandum of its own.
On Rs. 60 Lakhs outstanding, that is Rs. 30,000 of stamp duty on its own. Anyone testing whether a transfer pays off should count this sum and the new lender's processing fee. Adding a top-up loan might also mean recording an extra deposit.
Ending the Mortgage
Repayment alone does not wipe the entry. After the final instalment, the deeds return together with a no-dues certificate, and the sub-registrar records the mortgage as released. Under RBI rules, lenders have 30 days after full repayment to hand back documents and clear registered charges.
Three checks are worth making then:
- Each original listed in the memorandum has been returned
- A newly drawn encumbrance certificate lists the discharge
- CERSAI shows the charge as satisfied
The state keeps what it was paid on the memorandum, because that money bought the mortgage record once. It is a single, non-recurring cost.
Putting It in the Budget
The law fixes the rate, so the loan amount alone gives you the duty. Keep it in the pot of cash needed before disbursement, together with sale deed charges and lender fees. If a quote comes in well over 0.5% of the loan, ask for the registration fee and the scanning charges to be shown separately.
The EMI calculator estimates upfront cash for a price and loan you choose. If you are shopping in Bangalore, request a project's cost sheet from us, and these charges will appear beside the price.
