How to Get a Mortgage Loan Against Mutual Funds and Shares

If you ever planned on taking a loan or already have one on your name, you must be aware of the term mortgage. If you have no clue about it, mortgage refers to a legal agreement between a lender and a borrower. The lender (can be a bank, NBFC or a private financer) temporarily takes the title of the debtor's property with the condition that the conveyance of title becomes void upon the payment of the debt.

Now, a mortgage loan can be of different types. To name a few, Indian banking ecosystem has the following mortgage loan options:-

1. Loan against property, commonly misunderstood as mortgage loan whereas it’s just a type. 
2. Home loan - the property being purchased is taken as collateral for the loan. 
3. Loan against securities - the recent addition to an already wide category, allows borrowers to take a loan against mutual funds, share market bonds or any other security. 

Assuming we all are well aware of the first two options; we’ll talk a little about the third option. Accordingly, loan against mutual funds/ shares/ other securities allows people to mortgage their securities and borrow a loan against it.

Loan Against Mutual Funds

Key features of loan against securities:-

1. Loan amount varies as per the maturity value of securities subject to the maximum specified by the lender. 
2. Interest rates are lower given the presence of security.  
3. Your investment maturity value remains unhampered.    
4. Lastly, you get a good amount of time for repayment along with end-usage flexibility. 

Thus, if you’re ever stuck amidst a cash crunch and don’t have plans to liquidate your savings, loan against mutual funds is your best sidekick. 

To know more about the loan against shares and funds, click here: How to Use Mutual Funds and Shares as Collateral for a Loan