Do you need Loan Against Mutual Funds

Following are the key benefits of applying for a loan against mutual funds:

No need to liquidate your mutual funds

Your mutual funds remain invested even after you pledge eligible units against the loan. You can access funds for temporary requirements without redeeming your investments. This lets you stay invested while addressing immediate financial needs.

Pay interest only on the amount you use

You get a pre-assigned loan limit against your eligible mutual fund investments. Interest is charged only on the amount you actually withdraw from this available limit. This means you can borrow as much as required without using the entire sanctioned limit.

Get a substantial loan amount

You can get a maximum loan limit of up to Rs. 50 Cr against eligible mutual fund investments. The actual loan amount depends on the fund type, value, and applicable loan-to-value ratio. Your eligible limit is determined after assessing the approved securities in your portfolio.

Choose a tenure that suits your requirement

You can choose a loan tenure ranging from 7 days to 36 months. This gives you the flexibility to align repayment with your expected cash flows. Selecting an appropriate tenure can help you manage your borrowing more effectively.

Choose from 5000+ approved mutual funds

Get access to more than 5000 approved mutual fund schemes across 40+ AMCs. However, the eligibility of your investment depends on whether the scheme is included in the approved list.

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

When facing urgent financial needs, many investors consider redeeming their mutual funds. However, selling your investments may involve capital gains tax, applicable exit load charges, and loss of potential future market growth. It can also disrupt your long-term investment strategy. With a loan against mutual funds, you can access funds without redeeming eligible units. Your investments remain pledged and can continue participating in market movements throughout the loan tenure.

As a secured facility, it can offer competitive interest rates and flexible repayment options. You also pay interest only on the amount withdrawn, rather than the entire sanctioned limit. This makes borrowing against mutual funds a strategic way to meet temporary financial needs.

The application process for Loan against mutual funds can be completed online after checking eligibility and supported securities. You need to provide personal details, KYC information, and investment-related information. The required documents include a PAN card, KYC documents, and a Consolidated Account Statement.

Steps

1. Visit the official loan against mutual funds application page.
2. Enter your basic personal and contact details.
3. Provide the requested investment information.
4. Check the mutual funds eligible for pledging.
5. Select the schemes and units you want to pledge.
6. Choose an amount within your available loan limit.
7. Complete the required KYC verification.
8. Provide and verify your bank account details.
9. Review the applicable loan terms and agreement.
10. Complete the lien marking process for selected mutual fund units.

11. Receive the approved loan amount after successful verification.

    
    

    The precise application flow can vary according to the facility and applicant profile.

Before you apply for a loan against mutual funds, consider a few important factors to ensure it suits your financial requirement:

• Approved list of funds: Not every mutual fund scheme may qualify for a loan. Lenders generally accept selected equity, debt, and other eligible funds as collateral.
• Loan-to-value ratio (LTV): The LTV determines how much you can borrow against your mutual fund units. Debt mutual funds may qualify for a higher LTV than equity schemes because of their comparatively lower volatility.
• Borrowing limits: Lenders specify minimum and maximum loan limits for this facility. Ensure the amount you require falls within the applicable borrowing range.

• Default consequences: A loan against mutual funds is a secured facility. Failure to meet repayment obligations may result in the lender selling pledged units to recover outstanding dues.

  
  

Evaluate the eligible funds, applicable LTV, borrowing limit, and repayment obligations before pledging your mutual fund investments. Pledge your eligible mutual funds to access funds without immediately redeeming your investments.

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

One of the key benefits of this facility is its convenient digital application and servicing experience.  With digital mutual fund records and RTA integrations, you can complete the process without visiting a branch.
You can initiate the application using your PAN and registered mobile number. Your eligible mutual fund portfolio can then be securely retrieved through the digital process. From selecting units for pledging to completing verification and receiving funds, the journey can be completed online. This makes the facility convenient for time-sensitive needs, including medical expenses, education payments, and short-term business requirements.

A loan against mutual funds can provide liquidity without requiring you to redeem eligible investments. It can be suitable for temporary requirements supported by a clear and manageable repayment plan.

The facility offers flexible access based on eligible securities and applicable loan-to-value ratios. Interest is charged only on the amount withdrawn from the available limit. However, borrowing is not automatically better than selling investments. You should compare interest costs, processing fees, market risks, and your repayment capacity first. A carefully planned decision can help you access funds without unnecessarily disturbing your investment strategy.

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