Tips to qualify for a loan against mutual funds
Want to make sure your application is approved smoothly? Follow these simple tips to avail a loan against mutual funds:
1. Defining the purpose of the loan is important
Before applying, be clear about why you need the loan whether it is for a medical emergency, education fees, or any urgent expenses. A well-defined purpose also helps the lender understand your requirement better.
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2. It is important to choose a high-value lender
Not all lenders offer the same value for your mutual funds. Look for one that provides a higher sanctioned amount, charges interest only on the used amount, and promises quick disbursal with minimal paperwork. Also, keep an eye on additional costs like processing fees or foreclosure charges.
3. It is important to check whether the mutual fund units are eligible for availing loan
Not every mutual fund is accepted by every lender. Before applying, check if your MF units are on the approved list. This helps avoid delays or rejections in processing your loan.
4. The borrower must fulfil the eligibility criteria
Every lender has its own set of conditions, but one thing is universal you must meet the basic eligibility. A good credit score, age, and valid KYC documents play a key role in getting approval. Higher creditworthiness can even help you get better terms on your loan.
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Loan against mutual funds eligibility
Here are the standard eligibility requirements to apply for a loan against MF:
You must be an Indian resident between the ages of 18 and 90 years at the time of application.
You can be salaried, self-employed, or even a professional such as a doctor, lawyer, or consultant.
Your mutual fund portfolio should be valued at a minimum of Rs. 50,000. This ensures that the loan has sufficient security backing.
Not just individuals corporates, Limited Liability Partnerships (LLPs), Trusts, Hindu Undivided Families (HUFs), and Sole Proprietorships are also eligible to apply for a loan against MF units.
Do note that these criteria can vary from one lender to another. Always confirm the specifics before applying.
How to avail loan against mutual funds?
Applying for a loan against mutual funds is now easier than ever. Here’s how you can do it online:
Step 1: Visit the official website of your chosen lender. Look for the section offering Loan Against Securities or Loan Against Mutual Funds and click on the ‘Apply Now’ button to access the online application form.
Step 2: Fill in your basic personal details such as full name, registered mobile number, and email ID. This helps initiate your application and allows the lender to verify your identity.
Step 3: Select the type of security you want to pledge in this case, mutual funds and enter your total portfolio value. This step helps the lender estimate your loan eligibility.
Step 4: Choose your city of residence from the dropdown. Review the terms and conditions, and proceed only after accepting them.
Step 5: You will receive a One-Time Password (OTP) on your registered mobile number. Enter the OTP to verify your details and complete the application process.
In many cases, lenders also offer a pre-approved loan limit based on your KYC and investment profile. If you are eligible, this loan can be disbursed almost instantly, helping you meet your urgent financial needs without liquidating your mutual funds.
Conclusion
Getting a loan against mutual funds can be a smart financial move when you need urgent liquidity without disturbing your long-term investments. It is secure, fast, and helps you make the most of your mutual fund portfolio. Before applying, always compare lenders on factors like LTV ratio, interest calculation method, processing fees, and prepayment options. You can also use a loan against mutual fund EMI calculator to estimate your monthly repayment. Most importantly, make sure your mutual fund units are eligible and that you meet the lender’s criteria.
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Apply for a hassle-free Loan Against Mutual Funds today.
