Loans Against Mutual Funds Investments: Here's What You Need To Know

Loans against mutual funds

Investors can get loans against mutual fund holdings without redeeming their investments.

Eligibility

The eligibility criteria for getting a loan this way is having mutual funds schemes that are eligible for the loan option. Borrowers should verify their banks and Non-Banking Financial Companies (NBFCs) that offer loans against mutual funds.

Application

Loan application is submitted online on the lender's website or via the branch office. Loan applications along with the mutual fund details have to be filled by the investors.

Mutual Fund Units

In order to get the loan, borrowers need to make a lien on their mutual funds in favour of the lender. This is done by sending a lien request to the mutual fun house. Once a lien is created, the lender receives control over the pledged units as collateral.

Loan Disbursement

After verification of the pledged mutual funds holding, the lender gives the loan amount based on the Loan-to-Value (LTV) ratio.

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