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

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

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.