How to Get Loan Against Your Mutual Fund Holdings at Least Interest Rates

One indirect benefit of an increase in Investment opportunities is that the investors can today also avail a loan against the mutual funds, bonds and shares they own and invest in. The amount that you get a loan is lower than the actual market value of the investment/units that are held by the loanee (known as margin or haircut).

Anyone would like to avail a loan at low-interest rates and the loans against mutual funds are benefiting in this regard. But while the loan against mutual funds units and holdings has a low-interest rate you, need to handover the assets (known as collateral). Here are some points that you must consider and evaluate before actually taking a loan against mutual funds, as these aspects have an impact on the interest rates of the loan.

Cross Check The Eligibility

Not all Mutual Funds are eligible for loans. Therefore you need to check the eligibility conditions laid by the particular financial institution from which you are trying to get a loan against mutual funds. The better mutual funds are highly valued and you get loans at lower interest rates for them.  Interest rates are the highest for risky funds.

Value Of Your Mutual Fund

Interest rates for home loans are subject to the market value of the mutual fund. You can get a loan easily when your mutual fund units have a good value, as these loans are deemed to be of less risky nature by the financial institutions.

Prepayment

Prepaying the loan against mutual funds is always a better option when you are seeking affordability and saving of costs. Whenever possible, repay the loan early so as to save cost and the interest rates that you would otherwise pay each month.

Credit History

The repayment and credit history (CIBIL score) also have an impact on the ease with which you get the loan. The better your credit history, the more likely you are to get the loan easily. A Credit score of 750 or above is good.

Comparison

You should check and compare the interest rates a few financial institutions and from which you decide to get a loan against Mutual Fund. The comparison can bring to you options towards getting your loan at a lower interest rate.

You can choose from a wide range of loan options today including the business and personal loans, and also get a loan against your shareholding. The processes are now more hassle-free and consume least of time.

To know more about the loan against mutual funds facility, click here: Borrowing a Loan Against Mutual Funds at a Lower Rate Made Easy