Loan on Mutual Funds is a convenient and effective way to raise funds without redeeming your investments. By pledging your mutual fund units, you can avail a loan while continuing to benefit from potential market growth. It is an ideal solution for those seeking short-term liquidity without compromising their long-term financial goals.
For example:
- You hold equity mutual fund units worth ₹1,00,000.
- You approach a lender and pledge these units as collateral.
- The lender offers a loan of up to 70% of the NAV, i.e., ₹70,000.
- You receive funds without selling your units and still earn returns.
- You repay the loan as per agreed terms, and your units are released.
Types of Mutual Funds Eligible:
- Equity Mutual Funds: You can pledge your equity-based funds to get a loan, although the eligible loan amount is based on market value and risk.
- Debt Mutual Funds: These are less volatile, and lenders may offer slightly higher loan-to-value (LTV) ratios.
- Hybrid Funds: These include both equity and debt components, and loan eligibility is calculated based on fund composition.
Key Features:
- Quick Processing: Minimal paperwork and fast disbursal make it an attractive financing option.
- No Need to Redeem Units: Your investments remain intact and continue to earn returns.
- Attractive Interest Rates: Lower than unsecured loans since mutual fund units are pledged.
- Flexible Repayment: Options tailored to suit your financial convenience.
- Online Monitoring: Track both your investment and loan status seamlessly.