Learn all about loan against mutual funds. Get instant funds in India with loan on mutual fund—no need to sell your investments. Check eligibility now!
Anjali Singh
Assistant Manager
You have played the long game, invested regularly in mutual funds, and spent years carefully building the portfolio. It’s finally doing great, and things are looking good for the future. But life, as we know it, loves to throw surprises. You now suddenly need some cash just for a short while, and the last thing you want is to break your long-term investment. That’s where a loan against mutual funds can help. It lets you borrow money by using your existing investments as collateral. Even better, the process can now be fully digital. If this sounds like something you would want to explore, read this blog till the very end to know how these loans work and why it might be a smart move.
A loan against mutual funds is a secured loan means you can take money from a bank or lender by keeping your mutual funds as a guarantee (called security). You don’t have to sell your mutual funds investments to get cash. Instead, you tell the bank, “These mutual funds are mine, I will keep them with you, and in return, please give me some money.”
It works like this:
Imagine you have a gold chain. Instead of selling it, you give it to a bank and take a loan. Later, you return the money, and the bank gives your chain back. A loan against mutual funds works in the same way.
Your mutual funds stay in your name and still earn returns. But at the same time, you get money to use for your needs—like paying school fees, handling a medical emergency, or managing business costs.
It’s a good option if you need money quickly but don’t want to lose your investment.
Why do so many investors choose a loan on mutual funds in India? Here are the top reasons:
Eligibility is broad and straightforward:
Note: Not all mutual funds are eligible. Lenders maintain an approved list, and the fund must be registered with their partner RTAs (like CAMS).
Here’s what you’ll generally need to apply for a loan against mutual funds online:
My Mudra accepts digital copies, making the process quick and paperless.
My Mudra has a quick and easy 5–step process, from application to funds completely online within minutes. Here’s a simple roadmap:
The best part? The entire process can be completed in as little as 15 minutes.
Before you take out a loan on mutual fund, it’s smart to know what your repayments will look like. That’s where My Mudra’s loan against mutual fund calculator comes in handy.
How does it work?
Just enter:
The calculator instantly shows your monthly EMI. This helps you plan your finances and compare offers easily.
Pay interest only on the amount you use. Repay the principal as per the agreed terms and manage your finances efficiently using My Mudra’s EMI Calculator.
Example:
If you borrow ₹5 lakh at 11% for 2 years, your EMI will be calculated based on these inputs. You can adjust the amount or tenure to see how your EMI changes.
|
Feature |
Loan Against Mutual Funds |
Personal Loan |
Credit Card Cash Advance |
|
Collateral Required |
Yes (mutual funds) |
No |
No |
|
Interest Rate |
8–12% (typical) |
12–24%+ |
24–48%+ |
|
Processing Time |
Minutes to hours |
1–3 days |
Instant |
|
Impact on Investments |
None |
None |
None |
|
Maximum Loan Amount |
50–80% of NAV |
Based on income |
Credit limit |
|
Repayment Flexibility |
Overdraft/EMI |
EMI |
Lump sum/EMI |
Key advantages:
Many top banks and NBFCs offer loan against mutual funds online. Here are some leading names:
✔ ICICI Bank: Up to 50% (equity) or 80% (debt) of NAV; interest rates around 10.75%–11.75% p.a.
✔ Axis Bank: Similar features; interest rates lower than personal loans; instant loan up to ₹2 crores.
✔ SBI Bank: Offers loans against mutual funds up to ₹10 Lakh (equity funds) and ₹5 crore (Debt Funds) with competitive rates.
✔ HDFC Bank: High Loan to Value (up to 80%), digital application and quick disbursal.
✔ Bajaj Finserv: Fully online process, flexible eligibility, and instant approval.
Always check the latest rates and terms on the provider’s website.
Suppose you have ₹10 lakh in debt mutual funds. You need ₹7 lakh for a business opportunity. Instead of selling your funds (and losing out on future gains), you pledge them and get a loan at 9% p.a. You use the funds, repay the loan in a year, and your investments remain intact.
A loan against mutual funds is a smart, flexible way to get liquidity without interrupting your investment growth. It’s fast, affordable, and easy to manage especially when you apply online. Whether you’re facing an emergency, planning a big purchase, or just want some extra cash flow, this option keeps your financial goals on track.
At My Mudra, we help you get loan against mutual funds online quickly and transparently. Our experts guide you through every step, from checking eligibility to disbursal, so you can access funds without stress. Ready to explore your options? Apply with My Mudra today and experience hassle-free borrowing!
Ans: It’s a secured loan where you pledge your mutual fund units as collateral to get funds, without selling your investments.
Ans: Yes, most lenders (including My Mudra) offer a fully digital process for applying and managing your loan.
Ans: Rates usually range from 8% to 12% per annum, depending on the lender and fund type.
Ans: You can typically borrow 50% (equity) to 80% (debt) of your mutual fund’s NAV.
Ans: PAN, KYC documents, mutual fund statement, and bank details.
Ans: Yes, but all joint holders must be co-applicants.
Ans: Some lenders may charge a penalty as pre-closure charges; always check the terms before applying.
Ans: Yes, your SIPs can continue as usual while you take loan on mutual funds. The pledged units will be marked as lien but not sold.
Ans: If you default on loan against mutual funds, the lender can sell your pledged mutual fund units to recover the outstanding amount.
Ans: Some lenders allow NRIs to apply, but terms may differ. Check with your provider.
Assistant Manager
Hey there, I'm Anjali Singh. With over 6 years of experience in finance, I specialize in creating content on banking, loans, and financial planning. My goal is to simplify complex financial topics and help readers make informed decisions through my articles.
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