LOAN AGAINST MUTUAL FUNDS
People invest in mutual funds owing to its prowess in offering convenience, asset diversification and long-term gains. However, apart from yielding good economies of scale in terms of lower transaction costs (as compared to buying individual stocks), mutual funds offer another benefit: liquidity in times of financial distress. Taking a Loan Against Mutual Fund units (LAMF) helps you leverage your existing mutual fund investments.
How does Loan Against Shares work?
Loan Against Mutual Funds offers customers the opportunity of receiving immediate liquidity against the mutual fund units they own. This is essentially an overdraft facility for short-term monetary requirements, with a relatively shorter tenure than other loans. You may take a loan against the mutual funds you own to earn immediate returns on it, as well as earn surplus reserves to invest elsewhere. To avail of a Loan Against Mutual Funds (LAMF), the borrower must request the Mutual Fund Registrar to mark a lien against the mutual fund units.
Is Loan Against Mutual Funds (LAMF) for you?
The LAMF is a beneficial monetary tool for those looking to leverage their otherwise idle mutual fund investments, and raise capital quickly for short-term financing needs. You need not sell your mutual fund units, nor is your ownership of the fund units divested after pledging them for a loan. Institute also enables the borrower to buy additional mutual fund units even when they don't have the entire amount of money required. The borrower may bring in the margin amount and we will provide the balance amount as loan. However, the loan amount is subject to the quality of the mutual funds in your possession.
Loan Against Mutual Funds (LAMF) process
Collateral: Owned mutual fund units (as per approved list of mutual funds).
Tenure: Up to 1 year.
Minimum Loan Amount: Rs 25 lakh.
Loan Amount Margin: 10% to 50% depending on the securities furnished.
Please ask us for the list of approved mutual fund houses at the time of making your loan application.
So what next?
If you want to apply for Loan Against Mutual Funds.
Our Relationship Manager can meet you at your convenience.