"Learn how to secure a loan against your mutual fund investments online with My Mudra. Know the process of taking a loan against mutual funds online."
Published: 19 October 2023
Updated: 19 October 2023
Loan Against Mutual Funds is a financial product that can give you double the profit. Imagine investing in mutual funds and getting financial aid on it. Double profit with single profit, loan against mutual funds is one of the best financial aid. Usually when a person takes mutual funds the intention behind the same is that it shall serve as an investment. But the financial product has also been launched by the lenders that can help you to take financial help against your mutual funds.
Loan against mutual funds interest rate usually starts from 10% P.A. The interest rate on a loan against mutual funds usually depends upon the eligibility and the amount of mutual funds that a borrower has in his or her name. Taking a loan against your mutual funds can be a convenient way to access funds when you need them. This option allows you to leverage your investments without having to sell your mutual fund units. In this article, we will guide you through the process of taking a loan against your mutual funds online, covering the key steps and considerations to keep in mind.
Below are the points that should be followed for taking loans against mutual funds. If you are a person who is keen on taking financial aid from mutual funds, then consider these points to ease the process of taking a loan.
Before proceeding with the application for a loan against mutual funds the first step is to have a clear understanding of a loan against mutual funds. When you take a loan against your mutual funds, you essentially pledge a portion of your mutual fund holdings as collateral to a financial institution or a bank.
Not all financial institutions or in the common language we call banks and NBFCs offer loans against mutual funds. To initiate the process online, you need to identify a lender that provides this service. Get to know the loan against mutual funds interest rate offered by different lenders. Many banks and Non-Banking Financial Companies (NBFCs) offer mutual fund loans. It's advisable to compare interest rates, terms, and conditions offered by different lenders to make an informed decision.
Each lender will have specific eligibility criteria for offering loans against mutual funds. Loan against mutual funds eligibility includes the type of mutual funds eligible for loans, the minimum holding period, and the minimum value of your mutual fund portfolio. Ensure that you meet these criteria before proceeding.
Once you've selected a lender and confirmed your eligibility, one can start applying for the loan on mutual fund through their online tools or contact their customer service to assess the maximum loan amount you can secure based on your mutual fund holdings. The interest rates on such loans can vary, so make sure you understand the interest structure, whether it's fixed or floating.
Most lenders have an online application process. Visit the lender's official website and navigate to the loan against mutual funds section. Fill out the online application form with your personal and financial details, including your mutual fund holdings. Ensure that you provide accurate information to expedite the approval process.
A borrower will be required to submit certain documents to support your loan application. Commonly requested documents include:
KYC documents (Aadhar card, PAN card, Passport, etc.)
Proof of address
Proof of income (salary slips, ITR, bank statements)
Mutual fund statement
Loan application form
Ensure that you have these documents readily available to ease the process of loan against mutual funds.
After submitting your application and necessary documents, the lender will review your request. Upon approval, the loan amount will be disbursed directly to your bank account. Depending on the lender's internal procedures, the disbursement process may take a few days.
Loan against mutual funds typically have a predetermined tenure, and you must make regular repayments, including interest, as per the loan agreement. Be aware of the interest rate and the repayment schedule, and ensure you have a repayment plan in place to avoid defaulting on the loan.
While your mutual fund units are used as collateral for the loan, they will continue to be managed by the Asset Management Company (AMC). It's crucial to monitor your portfolio's performance, as a decline in the NAV might necessitate additional collateral or repayment.
Once you have repaid the loan in full, the lender will release the mutual fund units held as collateral, and you will regain complete ownership of those units.
Taking a loan against mutual funds online can be a convenient way to access funds while keeping your investments intact. However, it's crucial to carefully evaluate the terms, interest rates, and repayment schedule offered by the lender. Always ensure that you have a clear plan for repayment and monitor your mutual fund portfolio to mitigate any potential risks. With proper research and due diligence, you can make the most of this financial option while safeguarding your investment goals. Take a Loan Against Mutual Fund and use your investment to satisfy your financial needs. Apply for Loan against mutual fund from My Mudra and pass the hurdle of financial insecurity.
Also read: Loan Against Property without Income Proof
Get Personal Loan for Medical Emergency
Read more
Small Business Loans for Women
Read more
