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A Loan Against Mutual Fund (LAMF) is a type of Loan Against Security (LAS). It is a financial arrangement that allows individuals to utilize their mutual fund investments as collateral to obtain a loan from a financial institution or lender. This type of loan functions as an overdraft facility, where the bank or NBFC sets a borrowing limit based on the value of the mutual fund units.
However, you can easily opt for a digital loan against mutual funds an interest rate of 10.5%, lower than other traditional loans. The 100% digital process eliminates the need for lengthy paperwork and ensures a quick and seamless application process which can be completed in just 5 minutes. You can access over 6000+ mutual fund schemes that are registered with CAMS (Computer Age Management Services). Thus, while opting for LAMF, you don’t need to sell/redeem your mutual fund investments and continue earning returns on the pledged units.
Borrow Smart + Do Not Sale MF + Get Growth on MF Investment
What are the Loan Against Mutual Funds Salient Features ?
By availing a loan against mutual funds (LAMF) you can now protect yourself from any unforeseen occurrences by taking out loan funds secured by your assets. Here are some of its features:
Instant Access to Credit: Life is unpredictable, and so are your financial expenses. Therefore, with a predetermined limit based on the fund type (i.e. debt and equity funds), you can avail the loan up to 45% for equity MFs and 75% for debt MFs. It offers immediate liquidity against the mutual fund units you own.
Lower Interest Rates: Availing a mutual fund pledged loan has never been this easy. You can easily avail a loan against mutual funds with an interest rate of 10.5% per annum, which is lower than personal loans and credit cards.
Loan Tenure: The default loan tenure for loans against mutual funds is 36 months. However, if you wish to close your secured loan on mutual funds earlier..
Lower Monthly Payments: By applying for a secured loan against mutual funds, you only need to pay interest every month on the borrowed amount. For example, if you borrow Rs. 1 lakh, you only need to pay Rs. 875 every month at an interest rate of 10.5% per annum, with a complete flexibility to repay the principal any time before the loan tenure ends.
Zero Foreclosure Charges: You can make a payment towards your outstanding mutual fund loan amount anytime with zero foreclosure charges.
Flexible Repayment: The mutual fund loan repayment features and terms are quite flexible if you opt for a loan on mutual funds. Choose to pay the principal amount anytime within the repayment period.
What are the Benefits of Mutual Fund Loans ?
LAMF may offer several mutual fund loan advantages to individuals who are looking to meet their financial needs without selling their mutual fund investment.
Here are some of the potential instant loan against mutual funds benefits:
Get LAMF Within Hours: Applying for a mutual fund overdraft loan and waiting days for approval can be a frustrating experience. However, if you meet the eligibility criteria and have sufficient fund holdings, the entire process from application to disbursement will be completed in 2 working hours.
100% Digital Process: Now, you don’t have to visit banks or contact relationship managers. You can quickly complete your entire journey of availing a loan against mutual funds in just a few clicks on your mobile app.
Wide range of Mutual Fund Schemes: From a list of 6000+ mutual fund schemes, you can see how much loan you can take against your funds.
Select from a List of Approved Securities: Mutual fund companies work with CAMS & KFin (earlier known as KARVY) as their Registrars and Transfer Agents (RTAs). These RTAs mark liens against funds held in non-demat form only, based on which you can opt for a loan.
Retain Ownership: By pledging the mutual funds as collateral, you can access immediate funds while continuing to benefit from investment returns. This means you can keep investing and earning returns/dividends but won’t be able to sell/redeem your mutual funds.
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