A loan against mutual funds is a secured loan where mutual fund units are pledged as collateral. The borrower retains ownership of the investments while gaining access to funds based on the market value of the pledged units. This helps in meeting urgent financial needs without disrupting long-term financial goals.
Types of Loan Against Mutual Funds
- Loan Against Equity Mutual Funds : Higher interest rates due to market-linked risks.
- Loan Against Debt Mutual Funds : Lower interest rates compared to equity funds.
Key Features
- Quick Access to Funds - Fast processing and disbursal against pledged mutual funds.
- Retain Investment Growth - Continue earning returns on pledged units.
- Flexible Loan Amount - Based on mutual fund value and lender policies.
- No Prepayment Penalty - Some lenders offer flexibility in loan repayment.
- Lower Interest Rates - More affordable than unsecured personal loans.
A loan against mutual funds is a smart way to access funds without liquidating investments. It helps maintain financial stability while leveraging existing assets.