₹10,000 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
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How much loan can I get against mutual funds?
The loan amount available under a Loan Against Mutual Funds (LAMF) depends on the type of mutual funds pledged as collateral. Lenders generally offer up to 50% of the Net Asset Value (NAV) of equity mutual funds due to their relatively higher market volatility. In contrast, debt mutual funds are considered less volatile and may qualify for a higher loan-to-value ratio, typically ranging between 75% and 85% of their NAV.
Most lenders provide this facility in the form of an overdraft (OD), offering borrowers greater flexibility in accessing funds. Rather than receiving a lump-sum loan amount, you can withdraw money as and when required within the approved limit. Interest is charged only on the amount utilised, not on the entire sanctioned limit, helping reduce borrowing costs.
A key advantage of this arrangement is that your mutual fund investments remain intact and continue to participate in market growth, allowing your wealth to potentially compound over time while meeting short-term liquidity needs.
Check your eligibility and know how much loan you can get against mutual funds today.
Understanding loan limits against mutual funds
Different mutual fund categories attract different loan values. Here is a quick overview:
| Type of Mutual Fund | Loan-to-Value (LTV) Ratio | Explanation |
|---|---|---|
| Equity Mutual Funds | Up to 50% of NAV | Due to market volatility, lenders offer lower LTV to minimise risk. |
| Debt Mutual Funds | Up to 90% of NAV | Debt funds are relatively stable, allowing higher borrowing limits. |
Key points to remember:
- Equity fund loans give you moderate liquidity but preserve your growth potential.
- Debt fund loans can unlock larger amounts, suited for urgent high-ticket requirements.
- Your loan value changes with daily NAV fluctuations.
Secure higher limits with a loan against mutual funds without redeeming your investments. Apply now
Max loan amounts offered by leading lenders
How to Secure a Rs. 2 Crore Loan Against Securities Instantly
Here is an indicative comparison of maximum loan amounts lenders usually provide:
| Lender type | Maximum loan amount |
|---|---|
| Banks | Rs. 5 crores |
| NBFCs | Up to Rs. 50 crores |
This wide range makes loans against mutual funds suitable for both small and large financial needs.
Eligibility criteria for loan against mutual funds
Eligibility criteria
- Nationality: Indian
- Age: 21 to 90 years (A co-borrower is required if the applicant is over 70)
- Employment: Salaried or self-employed
- Security Value: Minimum of Rs. 50,000
Required documents
- PAN card
- KYC documents (any one of the following):
- Passport
- Driving License
- Voter’s Identity Card
- Aadhaar
- Job Card issued by NREGA
- Letter issued by the National Population Register
How to calculate your loan eligibility?
Your loan eligibility depends on:
- Type of fund (equity or debt)
- Number of units pledged
- Current NAV
- Applicable LTV ratio
Example: If you pledge debt mutual funds worth Rs. 10 lakh with an LTV of 75%, your eligible loan amount will be:
Rs. 10,00,000 × 75% = Rs. 7,50,000
This simple calculation helps you estimate how much liquidity you can unlock instantly.
What happens if the value of your mutual funds falls after taking a loan?
Since loans are linked to the market value of pledged units, NAV fluctuations affect your collateral value.
Key situations to note:
- If NAV falls, the loan-to-value ratio may breach limits.
- The lender may request additional collateral or partial repayment.
- Continuous market fall could lead to the liquidation of pledged units.
Being mindful of market risks helps you plan better before pledging.
Benefits for loan against mutual funds
How to apply for Bajaj Finance loan against shares
A loan against mutual funds offers multiple advantages:
- Retain ownership of your investments.
- Access funds quickly with minimal paperwork.
- Competitive interest rates
- Flexible repayment options with interest charged only on used amounts.
- High-value loans are possible against stable debt funds.
Enjoy liquidity and growth together with a loan against mutual funds. Apply now
Conclusion
Pledging mutual funds is an effective way to secure funds without compromising your long-term investment objectives. Whether you're addressing personal or professional financial needs, a loan against mutual funds offers immediate access to liquidity, flexible repayment options, and uninterrupted portfolio growth. This solution combines meeting short-term financial requirements with maintaining long-term financial stability.
Unlock the value of your investments today with a loan against mutual funds. Apply for a loan against mutual funds now
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Frequently asked questions
General
What is the maximum I can borrow against my mutual funds?
You can borrow up to 90% of the value of mutual funds, depending on the lender. The maximum limit can range from a few lakhs to several crores, subject to the value of pledged units.
How is loan eligibility calculated based on NAV and LTV?
Loan eligibility is determined by multiplying the current Net Asset Value (NAV) of your pledged mutual fund units with the lender’s Loan-to-Value (LTV) ratio. For example, if your debt fund units are worth Rs. 10 lakh and the LTV is 75%, you can borrow Rs. 7.5 lakh.
Are there different limits for equity and debt mutual funds?
Yes, limits vary. Mutual funds usually offer loans of up to 90% of their NAV due to market volatility.
What is the minimum loan amount I can avail?
The minimum loan amount varies by lender but generally starts from Rs. 25,000 to Rs. 50 crores. This makes it accessible for individuals seeking small, urgent liquidity needs, while also catering to those who may require higher-value loans against mutual fund holdings.
What happens if mutual fund NAV falls after borrowing?
If the NAV of your pledged funds drops, the value of your collateral reduces. This can breach the loan-to-value ratio agreed with your lender. In such cases, you may be asked to pledge more units or partially repay the loan to restore balance.
Can I get Rs. 20 lakhs without collateral?
Yes, you can get Rs. 20 lakhs through unsecured personal loans if you meet income and credit score requirements. Interest rates may be higher due to the absence of collateral.
Can I borrow money against a mutual fund?
Yes, you can borrow money against mutual funds by pledging your holdings as collateral. The loan value depends on the fund’s type and current market value.
Is it advisable to take a loan against mutual funds?
Taking a loan against mutual funds can be cost-effective with lower interest rates, but risks include market fluctuations affecting collateral value. Assess repayment ability and market risks before proceeding.
How do market conditions influence the eligibility for loans against mutual funds?
Market conditions play a key role in determining loan eligibility against mutual funds. During periods of high market volatility, lenders may reduce the loan-to-value ratio or restrict certain fund categories. Stable market conditions generally improve borrowing capacity, while sharp market downturns can lead to more conservative lending policies.
What happens to my loan if the market value of my mutual funds declines?
If the value of your pledged mutual funds falls significantly, the lender may issue a margin call and ask you to provide additional collateral or partially repay the loan. Failure to meet these requirements could result in the lender liquidating some or all pledged units to recover dues.
How do fluctuating mutual fund NAVs affect loan repayments?
Changes in mutual fund NAVs do not directly alter your scheduled loan repayments. However, a substantial decline in NAV can reduce the value of the pledged collateral, potentially triggering a margin call. Maintaining sufficient collateral value helps avoid additional repayment obligations or the need to pledge more investments.
Disclaimer
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