Loan Against Mutual Funds – A Quick Guide!


Financial emergencies and crisis, small or big, can strike anyone anytime without prior intimation.

Many times, investors are stuck in a situation that requires urgent access to cash on short notice for 3 months to 1-year long tenor. However, if you have an investment in mutual funds, you can cover many of your needs easily. How?

We are not talking about the easy method to break your investment. Yes, you should not do that before its scheduled tenor to get money and lose the stipulated interest gains on it. You can now look up to the loan against mutual funds and get money at lower interest rates.

If you are unaware of how the loan against mutual funds can help you, you should go through this post to help you know more.

What is a Loan Against Mutual Funds?

The loan against mutual funds is generally a loan wherein the subscriber needs to pledge the mutual funds. The mutual funds work as the collateral against the required loan amount at an attractive rate of interest.

A loan against mutual funds is the perfect way to make your investment keep reaping the interest ROIs without breaking them. This way, you can also make your invested money work hard work for you.

The loan against mutual funds interest rate will be applicable on the withdrawn money. It will be calculated as per the terms and conditions of the lender that you wish to apply.

To apply for the loan against mutual funds, most of the lenders need you to have a minimum portfolio worth Rs.10 lakh.

Loan against Mutual Funds Eligibility:

You also need to have the following loan against mutual funds eligibility to apply for it such as:

✓You need to be an Indian citizen
✓You must have attained an age of at least 21 years
✓You need to be a salaried professional or a self-employed person with a consistent flow of money
✓The minimum worth of your mutual funds ought to be at least Rs. 10 lakh

Loan Against Mutual Funds Documents at a Glance

Along with the eligibility terms, you also need to furnish some basic documents to apply for a loan against mutual funds such as:

✓ID proofs such as PAN Card, Aadhaar Card, and Driving License
✓Address proofs such as Aadhaar Card
✓Documented proofs of the mutual funds
✓Passport size photograph

Loan Against Mutual Funds Features and Benefits

1) Higher loan value to help cover all needs

Depending upon the portfolio that you have invested, you can easily get a loan amount of up to Rs.10 crore. Be it expanding your business or other personal and professional needs; you are free to use the money your way.

2) Dedicated Relationship Manager

Lenders also appoint a dedicated Relationship Manager to all customers applying for the loan against mutual funds. The appointed personnel is available 24/7 to assist you with all your requests and queries.

3) Zero part prepayment and foreclosure charges

Do you wish to make some part prepayment or foreclose the loan account before its scheduled tenor? You can do that now! Yes, prominent banks and non-banking finance companies (NBFCs) let you do that without letting you pay anything extra.

4) Online account access

Do you want to track the progress of your loan against mutual funds account from anywhere and 24/7? That’s possible with the online account access facility of lenders. You can track all loan details via your service provider’s digital customer portals.

You are now well aware of some of the basic inputs about the loan against mutual funds facility. If you need some urgent money without letting the investment ROI affected, you can apply for the loan against mutual funds and fulfill many needs.