loans

A Loan Against Mutual Funds (LAMF) is a convenient financing option that allows investors to unlock the value of their mutual fund investments without liquidating them. By pledging mutual fund units as collateral, investors can access short-term liquidity while continuing to benefit from the potential growth of their portfolio.

Key Features

  • Secured Financing – Loans are granted against pledged mutual fund units, ensuring quick approval and lower interest rates compared to unsecured loans.
  • Retention of Investment – Investors continue to remain the owners of their mutual funds and can still earn dividends or capital appreciation during the loan tenure.
  • Flexible Usage – Loan proceeds can be used for diverse purposes, including business expansion, personal requirements, or emergency needs.
  • Ease of Access – Simple application process with minimal documentation and fast disbursal.

Benefits of Loan Against Mutual Funds

  • Liquidity Without Redemption – Access funds without redeeming investments and losing market-linked returns.
  • Competitive Interest Rates – Generally lower than personal loans or credit card borrowings.
  • Overdraft Facility – Many lenders offer an overdraft option, allowing withdrawal of only the required amount and paying interest solely on the utilized funds.
  • Continued Market Participation – The pledged mutual fund units remain invested, enabling investors to benefit from potential market growth.

Eligibility and Process

Most leading banks and financial institutions in India offer loans against mutual funds. The eligibility depends on the value of pledged units and the type of schemes (equity or debt). The process typically includes:

  1. Application – Submitting a request with details of mutual fund holdings.
  2. Pledge Creation – Units are pledged electronically in favor of the lender.
  3. Loan Disbursal – Funds are released quickly, often within 24–48 hours.

Why Consider a Loan Against Mutual Funds?

For investors who require immediate liquidity but do not wish to disturb their long-term investment strategy, a Loan Against Mutual Funds offers the ideal balance of financial flexibility, cost-effectiveness, and convenience.