Do you need Loan Against Mutual Funds

Find out whether taking a loan against your mutual funds is truly necessary. Review key considerations before making a borrowing decision.
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3 mins
13-July-2026

Ever found yourself choosing between redeeming your mutual funds and taking a costly personal loan to meet an urgent expense? Many investors face this situation during emergencies such as medical bills, education costs, or unexpected family commitments. Fortunately, there is another option. A Loan Against Mutual Funds (LAMF) lets you access funds by pledging your eligible mutual fund units as collateral, allowing your investments to remain invested and continue participating in potential market growth. This means you can meet short-term financial needs without disrupting your long-term investment strategy. Instead of selling your mutual funds for temporary cash requirements, consider borrowing against them. Apply for a Loan Against Mutual Funds today and access funds while keeping your investment goals on track.

You do not need to sell your mutual funds for temporary needs. Instead borrow against them and keep your long-term gains intact. Apply for loan against mutual funds now


What is a loan against mutual funds?

A loan against mutual funds is exactly what it sounds like you pledge your mutual fund units as collateral and borrow money against them. Since these are secured loans, lenders like banks and NBFCs are willing to offer better terms, lower interest rates, and quicker disbursals.

The best part? Your investments remain intact and continue to generate returns even while being pledged.


Key benefits of loan against mutual funds

Let’s break down why this borrowing option is gaining popularity:

  • No need to liquidate: Your investments stay where they are. They keep growing while you take care of urgent needs.
  • Faster access to funds: You can apply online and receive funds in your bank account quickly often within 24–48 hours.
  • Lower interest rates: Because it’s a secured loan, the rates are much more attractive than personal loans or credit card EMIs.
  • Pay for what you use: Interest is charged only on the amount you actually draw, not the entire sanctioned limit.
  • Short-term flexibility: Perfect for temporary needs like medical emergencies, higher education, or large purchases.

Why break your SIP or redeem at a market low? Use your mutual funds as leverage instead. Apply in minutes


Why take a loan against mutual funds instead of selling them?

When faced with urgent financial needs, many investors instinctively think of liquidating their mutual funds. But doing so can result in capital gains tax, exit load charges, and worst of all losing out on the potential market growth that your investments might deliver in the future.

By choosing a Loan Against Mutual Funds (LAMF), you avoid these consequences. Your portfolio stays intact and continues to earn returns even while it's pledged as collateral.

Unlike unsecured, a loan against mutual funds offers lower interest rates, flexible repayment, and the peace of mind that comes from borrowing against your own assets. Plus, you pay interest only on the amount you actually use, not on the entire sanctioned limit.

This isn’t just borrowing its borrowing with strategy.

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Loan Against Mutual Funds

How to apply for a loan against mutual funds?

Applying for a loan against your mutual funds is quick, seamless, and entirely digital. Here’s how you can do it:

  1. Visit the Loan Against Mutual Funds page.
  2. Enter your basic personal details such as your name, PAN, and date of birth.
  3. Confirm your email address and mobile number.
  4. Bajaj Finance will securely retrieve your mutual fund holdings through trusted RTAs – CAMS and KFintech.
  5. You’ll then see a list of eligible mutual funds in your portfolio.
  6. Select the mutual fund schemes and units you’d like to pledge.
  7. Based on your selection, an instant loan offer will be generated you can modify the amount as per your needs.
  8. Verify the loan request with the OTP sent to your registered mobile number.
  9. Complete your KYC and link your bank account securely.
  10. Digitally review and sign the loan agreement.

Once verified, the loan amount is disbursed directly to your linked bank account often within hours.

No paperwork. No in-person meetings. Just effortless borrowing at your fingertips.

Factors to keep in mind before availing a loan against MF

Before you proceed, here are a few important aspects to consider:

  • Approved list of funds: Not all mutual fund schemes may be eligible. Lenders typically accept specific equity and debt funds as collateral.
  • Loan-to-Value ratio (LTV): This determines how much you can borrow against your mutual fund units. Debt mutual funds usually qualify for a higher LTV compared to equity schemes due to their lower volatility.
  • Borrowing limits: Each lender has defined minimum and maximum loan thresholds. Make sure your requirement aligns with these limits.
  • Default consequences: As with any secured loan, missed payments may lead to your pledged units being sold by the lender to recover dues. It's important to borrow responsibly.

Ready funds, zero redemption, and complete control this is how mutual fund-based borrowing should feel. Pledge your mutual funds and borrow today

Digital convenience and seamless access

One of the biggest advantages of this loan type is its fully digital, user-first experience. Thanks to the digitisation of mutual fund holdings and RTA integrations, you don’t need to gather physical documents or visit any branch. All you need is your PAN and registered mobile number to initiate the process. The platform fetches your portfolio securely, and the rest of the journey from pledge to disbursal is handled online. This makes it ideal for time-sensitive requirements, such as medical emergencies, tuition payments, or even short-term business gaps.

Read more: Loan against mutual funds explained

Conclusion

If you are facing an urgent financial need but don’t want to disrupt your long-term investment strategy, a loan against mutual funds offers the best of both worlds. It’s fast, flexible, and keeps your wealth intact. Whether it’s education, medical expenses, travel, or a business gap your mutual funds could be the smart way to raise funds without selling a single unit.

When time is tight, and your goals are intact, your mutual funds can help you do both stay invested and stay prepared. Get instant liquidity with a loan against securities

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.
For customer support, call Personal Loan IVR: 7757 000 000

Frequently asked questions ‌
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What makes me "really need" a loan against mutual fund?

You may need a loan against mutual funds during financial emergencies like medical bills, business needs, or urgent expenses. It offers quick liquidity without selling your investments, helping you meet short-term needs while preserving long-term wealth.

Can I still earn returns on my mutual fund during the loan?

Yes, your mutual fund units continue to earn returns even when pledged for a loan. Since you’re not redeeming them, the investment remains active, allowing you to benefit from potential market growth throughout the loan tenure.

How much can I borrow against my mutual fund?

The loan amount depends on the type and value of mutual fund units pledged. Typically, you can borrow up to 90% of the NAV. Limits may vary by lender and portfolio.

Which types of mutual funds are eligible for a loan against mutual funds?

Eligible equity, debt, and hybrid mutual funds are generally accepted as collateral. The final list depends on the lender's approved schemes, regulatory guidelines, and the mutual fund's eligibility.

What is the loan-to-value (LTV) ratio for a loan against mutual funds?

The loan-to-value ratio is the maximum percentage of your mutual fund's value you can borrow. It varies based on fund type, regulatory norms, and the lender's policies.

Is taking a loan against mutual funds better than redeeming them?

A loan against mutual funds can help meet short-term funding needs without selling investments, while redemption may impact long-term wealth creation and could have tax implications.

How long does it take to receive funds after pledging mutual funds?

Fund disbursal depends on successful lien marking, document verification, and the lender's processing timeline. Many lenders offer quick approval once all required formalities are completed.

When should you consider taking a loan against mutual funds?

You may consider a loan against mutual funds when you need short-term liquidity but want to keep your investments intact. It allows you to access funds without redeeming your mutual fund units, subject to lender eligibility and approval.

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