Get a Loan Against Your Investments

A loan against investment allows individuals to borrow funds using their investments as collateral. This can include stocks, bonds, mutual funds, or other securities.
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3 min
02-June-2025

What is a loan against investment?

A loan against investment is a type of financing where borrowers can secure a loan by pledging their investment holdings as collateral. This could include stocks, mutual funds, bonds, or other securities. One common form of this is a loan against shares, where shares in listed companies are used to secure the loan. This allows investors to leverage their investment portfolios to raise funds without actually selling their investments.

Types of investments you can pledge

Here are some popular financial assets you can use to avail a loan without liquidating your investments.

  1. Loan against shares
    You can pledge listed equity shares held in your demat account to raise instant liquidity. By availing a Loan Against Shares, you retain ownership and can continue benefiting from market gains while accessing funds for personal or business needs.
  2. Loan against mutual funds
    Mutual fund units, whether equity or debt, can be used as collateral to access funds. With a Loan Against Mutual Funds, there’s no need to redeem your units, making it an efficient way to meet urgent financial goals.
  3. Loan against bonds
    You can use government or corporate bonds as security to borrow funds without selling them. A loan against bonds allows you to maintain your bond holdings while tapping into their value for immediate cash requirements.
  4. Loan against insurance policies
    Traditional life insurance policies like ULIPs and endowment plans can be pledged for a loan. A loan against insurance policy enables you to access funds without surrendering your policy or disrupting your life cover benefits.
Loan Against Shares
Loan Against Mutual Funds

Key points about loan against investment:

  • Secured loan: The loan is secured against the marketable securities owned by the borrower.
  • Liquidity: Provides immediate liquidity without the need to sell the investments.
  • Loan amount: The amount depends on the value of the securities pledged.
  • Interest rates: Typically lower than unsecured loans due to the collateral.
  • Flexibility: Funds can be used for a variety of purposes, including business expansion, personal emergencies, or even purchasing other assets.

Features of loan against investment

Key features include:

  • Quick disbursal: Loans are disbursed quickly once the collateral is verified and valued.
  • Flexible tenure: Options for repayment can vary, offering flexibility depending on the lender’s terms.
  • Lower interest rates: Since the loan is secured, interest rates are generally lower compared to unsecured loans.
  • No impact on ownership: Borrowers continue to own their investments and receive dividends or interest as applicable.
  • Loan-to-value ratio: The percentage of the loan to the value of the investment can range from 50% to 80%, depending on the type of investment and the lender’s policy.

Benefits of loan against investment

Loans against investments come with several benefits:

  • Immediate access to funds: This type of loan provides quick access to large amounts of money without needing to liquidate investments.
  • Retain investment benefits: Borrowers continue to gain investment benefits like dividends and appreciation in value.
  • Lower interest rates: The secured nature of the loan often results in lower interest rates compared to personal loans.
  • Flexibility in use: The loan can be used for a variety of financial needs, from business expansion to personal emergencies.

Eligibility criteria for loan against investment

To qualify for a loan against investment, applicants must meet specific criteria:

  • Type of securities: Must own qualifying securities such as stocks, bonds, mutual funds, etc.
  • Account requirements: Must have a Demat account in case of shares.
  • Loan margin: Must meet the loan-to-value ratio set by the lender.
  • Credit history: Good credit history and a satisfactory credit score.
  • Income stability: Proof of stable income to ensure repayment capability.

Documents Required for Loan Against Investment

Necessary documents typically include:

  • Identity proof: PAN card, Aadhaar card, Driver’s license, etc.
  • Address proof: Recent utility bills, passport, or rental agreement.
  • Income proof: Latest salary slips, tax returns, or profit and loss statements for self-employed individuals.
  • Investment documents: Statements of Demat accounts, mutual fund statements, bond certificates, etc.
  • Application form: Properly filled application form provided by the lender.

How to apply for a loan against investment?

Follow these simple steps to apply for a loan against your investments:

Step 1: Assess your investments

Evaluate your current portfolio shares, mutual funds, bonds, or insurance policies to check eligibility and estimate the loan amount you can secure.

Step 2: Choose the right lender

Compare lenders based on interest rates, processing fees, loan-to-value ratio, and repayment terms. Choose one that best suits your financial needs.

Step 3: Fill out the application and gather documents

Complete the loan application form and compile all necessary documents such as ID proof, investment statements, and address proof.

Step 4: Verification and investment valuation

The lender will verify the submitted documents and assess the current value of the pledged investments to determine the eligible loan amount.

Step 5: Loan approval and fund disbursal

Once approved, the loan amount is quickly disbursed to your bank account often within 24 to 48 hours, depending on the lender.

Conclusion

A loan against investment is a powerful financial tool that allows investors to make the most of their existing portfolios without liquidating their assets. By understanding the features, benefits, eligibility criteria, and application process, borrowers can effectively secure necessary funds at lower interest rates and with considerable flexibility. Whether for personal or business-related financial needs, a loan against investment can provide the necessary capital while keeping investment strategies intact.

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Frequently asked questions

Can I take a loan against my SIP investment?
Yes, you can take a loan against your SIP (Systematic Investment Plan) investments in mutual funds. Many lenders offer loans against mutual funds, including those acquired through SIPs. The loan amount is typically a percentage of the current value of the mutual fund units held in the SIP. The permissible loan amount and specific terms can vary based on the lender’s policies and the performance of the underlying mutual fund investments.
Can we take a loan against portfolio investment?
Yes, it is possible to take a loan against portfolio investments, which can include a diverse mix of assets such as stocks, bonds, mutual funds, and other securities. Financial institutions offer loans against these portfolio investments by evaluating the current market value and liquidity of the assets. The terms and conditions, including the loan-to-value ratio, interest rates, and loan amount, will depend on the type of assets in the portfolio and the lender’s risk assessment criteria.
What is the maximum loan amount I can get against my investments?

The maximum loan amount depends on the type and value of your pledged investment. Generally, lenders offer up to 50–90% of the investment's market value, subject to internal limits and regulatory guidelines.

What types of investments can I pledge for a loan?

You can pledge listed shares, mutual funds (equity and debt), bonds (government or corporate), and life insurance policies like ULIPs or endowment plans. These investments must be held in your name and meet the lender’s eligibility criteria.

What are the interest rates for loans against investments?

Interest rates typically range between 8% and 24% per annum, depending on the lender, investment type, loan amount, and repayment terms. Secured investments and high-value portfolios may attract more favourable rates.

Do I lose ownership of my investments if I take a loan?

No, you do not lose ownership. The investments are only pledged as collateral. You continue to benefit from market appreciation, dividends, or bonuses, unless specified otherwise by the lender.

How is the loan amount determined against investments?

Lenders assess the current market value of the pledged investments and apply a loan-to-value (LTV) ratio, which can range from 50% to 90%. The final loan amount is based on this valuation and your credit profile.

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