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

Financial crunches are an everyday thing now. Either you take a loan or you pay from your own pocket, you can't just escape your cash needs. Talking of taking a loan, it is quite possible to take one every time there's a dearth of cash.

However, one should not expect the same to be available at a lower interest rate every time. If you do wish to avail a loan at a lower interest rate every time, here are some tips which can help you do that.

Cross check your eligibility: Before you set your ambitions high, it would be wise to cross-check your loan eligibility. You might be eligible for a loan against mutual funds based on your own understanding of the credit facility, banks/ NBFC might have the same opinion. So, once you’re done with choosing the right lender for yourself, find out the eligibility conditions on their website.

Generally, the eligibility conditions would be as following: (1) you must be above 21 years of age, (2) must be earning enough every month to qualify the minimum income condition, (3) your CIBIL score must be up to the mark.

Mutual funds maturity value: Any lender irrespective of how flexible they are, would only approve an application asking for a maximum of 60% to 70% of collateral’s maturity value as loan. So, make sure the maturity value of mutual funds you plan to mortgage is more than what you desire to borrow.

Bottom line: Arrange all the required documents in advance. You’ll need them while applying for a loan against mutual funds online. 

To Know more about how to approve loan against mutual funds at a low rate, click here: Borrowing a Loan Against Mutual Funds at a Lower Rate Made Easy

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

Since cash crunches have become a common phenomenon, having affordable funding solutions is an essential requisite. Having said that, these funding solutions need to be really affordable and accessible in order to be helpful.

For instance, a loan against mutual funds which lets people mortgage their mutual funds bonds and avail a loan against it can be a good option. However, in order to optimize the facility to a maximum, the applicant must be completely aware about all the ins and outs. Hence, on a similar note, below is a small guide on how to get a loan against property. 

What is a loan against mutual funds? 

A loan against mutual funds is a type of mortgage loan wherein the applicant gets to pledge their bonds and other securities as collateral to borrow a loan. The said facility can be availed from any bank or NBFC given the borrower has the required creditworthiness. The best part about this facility is, the borrower gets the desired financing while securing the maturity value of the investment at the same time.

How to apply for a loan against bonds? 

The application procedure is very simple. You can visit the nearest branch of the bank or NBFC you wish to proceed with for the loan and apply then and there. You can also use the online application feature provided by the lender to avail the loan. Just navigate to the online application feature, fill in the application form, attach all the necessary documents and then submit it. Once approved, the money will be disbursed directly into your bank account.

To know more about this facility, click here: A Handy Guide on How to Take a Loan Against Mutual Funds    

There arise many instances in our lives wherein we require funds on a short notice but we do not have the requisite amount in our savings. The emergency is of such a pressing nature that we cannot wait for a bonus or salary hike and the assets cannot be liquidated on such a short notice. Despite this many individuals go ahead and sell their assets at a loss and lose ownership as well.

What such people do not know is that instead of selling off their high-value investments such as mutual funds, they can apply for a loan against it. This not only helps in retaining ownership but they also continue to earn interest for the period during which they are pledged as a collateral.

Availing Loan Against Mutual Funds

There are a number of financial institutions including NBFCs (Non-Banking Financial Companies) which offer loan against mutual funds at nominal rates. One of the biggest benefits provided by NBFCs is that of the sanctioned amount, you have the liberty to use as much money as you require and pay interest only for the part that is used. This greatly reduces the installment which is paid each month.

Loan Against Mutual Funds

The process of application is very easy. Here’s how you can do it - 

1. Apply for the loan online
2. Fill out the application form with the basic details
3. A confirmatory text will be sent along with an email regarding the status
4. Next, a representative will visit you to complete the process and gather documents
5. Once your documents have been verified, the funds are disbursed in a very short span of time. 

You can also track the disbursal of the loan from the online account which is provided to you.

To know more about this loan facility, click here: How to Avail a Loan Against Mutual Funds

Since the time I have been investing I wonder how actually can mutual funds be of use. Though, I would admit that these investments have been quite a nail-biting experience for me. But, nonetheless they have offered me appreciable returns.

Well, to my surprise my financial planner told me that now that I have made appreciable returns on my mutual funds I can take a loan against them. I am thrilled because I am planning an exotic vacation with family and now I feel I won’t have to withdraw from my savings.

So, I took out time form my schedule and sat down with my financial planner how to go about it. She suggested me an experienced lender with credibility and reputation. Then, depending on the amount I needed she helped me fill up the form for the loan against mutual funds online. After which, we won’t have to wait loan and can enjoy instant approval for the loan.




Trusting my financial planner I took the bargain and applied for a loan amount which would cover my entire vacation itinerary and which I can easily pay back on a monthly basis. I was thrilled to get the loan as planned and moreover I suggested my colleague for the same as he too needed funds to manage his mother’s treatment expenses.

The best part is I don’t have to take the help of my financial planner often. As my loan is all set up online I make sure the repayments are on time and that I track and manage it even when I am out of town for business work.

Also read: Did you Know you can Get a Loan Against Your Mutual Fund Units

Financial crisis can hit anyone, at anytime. Instead of giving into panic you can take loan against your investments. This is a traditional yet quicker method to liquidate your fixed assets. If you are not sure how to go about it I suggest your conduct a primary research online. You will find numerous lenders especially NBFCs which offer proper guidance and support to help you get the loan.

One of the benefits of getting a loan against mutual funds is that you do not have to redeem your units before time. It also makes sure that your SIP or Systematic Investment Plan does not get affected , in any way. 




The best part is as most of the information is online it saves your time. You do not have to meet the lender in person to finalize the deal. However, you can always do that if you have time for one-on-one interactions. With digitisation taking over it becomes easier to manage the loan against mutual funds online. You can track it anytime from anywhere and take informed decisions during the loan cycle.

In order to get the loan it is important you know the eligibility criteria for the process. Usually, lenders provide the loan to applicants -

Whose mutual fund or collateral in this case is of a certain minimum value and they all the paperwork stating the same. Additionally, lenders prefer applicants who have a stable source of income such as a job. This ensures the lender that the applicant is capable to pay back the loan.

For more information read this article: 6 Things to Know About Loan Against Mutual Funds

A lender will put a lien on the pledged units of the mutual funds, as these will be sold and recovered by the banks and NBFCs when an applicant becomes a defaulter.

Generally, a loan against mutual funds is sanctioned up to 60-70% of the pledged value of the mutual funds at the time of application.

Read More :- Important Tips to Help You Qualify For Loan Against Mutual Funds

A loan against mutual funds is the right solution in such situations.