Loan Against Mutual Funds
What is a Loan Against Mutual Funds?
A Loan Against Mutual Funds (LAMF) allows you to borrow money by pledging your existing mutual fund units as collateral. This facility helps you meet immediate financial needs without redeeming your long-term investments.
At Novasure, we help you unlock the value of your mutual fund portfolio while allowing your investments to remain invested and continue participating in market growth.
A Loan Against Mutual Funds is a secured loan where your mutual fund units are pledged with a lender. Based on the value and type of funds, a credit limit is assigned, and you can withdraw funds as required.
You continue to remain the owner of your mutual fund units, and your investments stay intact while being pledged.
Types of Mutual Funds Eligible for Loans
Equity Mutual Funds
Loans against equity funds generally offer higher credit limits due to their long-term growth potential, though limits may vary based on market conditions.
Debt Mutual Funds
Debt mutual funds invest in fixed-income instruments such as government securities, corporate bonds, and money market instruments.
Hybrid Mutual Funds
Loans against hybrid funds provide a balance between stability and growth, with credit limits determined by the equity-debt composition of the fund.
FAQs
Why Choose a Loan Against Mutual Funds?
This borrowing option is ideal for short-term liquidity needs without disrupting long-term financial goals.
Key Benefits of Loan Against Mutual Funds
- No need to sell your mutual fund investments
- Lower interest rates compared to unsecured loans
- Flexible withdrawal and repayment
- Interest charged only on the amount used
- Faster processing and minimal documentation
How Loan Against Mutual Funds Works
The process is simple and fully digital:
Step 1: Check Credit Limit
Evaluate your mutual fund portfolio and determine the eligible credit limit.
Step 2: Pledge Mutual Fund Units
Your mutual fund units are pledged securely with a trusted lender.
Step 3: Complete Digital KYC
Complete your KYC process online within minutes.
Step 4: Withdraw Funds
Withdraw funds as needed and repay as per convenience.
Who Should Opt for a Loan Against Mutual Funds?
A Loan Against Mutual Funds is suitable for:
- Investors needing short-term liquidity
- Business owners managing cash flow gaps
- Individuals facing temporary financial needs
- Investors who want to avoid capital gains tax from redemption
Flexible Withdrawal & Repayment Options
Flexible Withdrawal
Withdraw funds only when required and pay interest only on the utilised amount. There are no hidden charges.
Easy Repayment
- Monthly interest-only payment
- Repay principal anytime
- No prepayment or foreclosure charges
Safety & Ownership of Mutual Funds
Even after pledging:
- You remain the owner of mutual fund units
- Units continue to earn market returns
- Funds remain under your name
This makes Loan Against Mutual Funds a safe and efficient borrowing option.
Eligibility Made Simple
Loan Against Mutual Funds typically does not require:
- High CIBIL score
- Income proof
- Employment status verification
Eligibility depends mainly on the value and type of mutual fund holdings.
Loan Against Mutual Funds vs Other Loan Options
| Feature | Loan Against MF | Personal Loan | Credit Card |
| Collateral | Mutual Funds | None | None |
| Interest Rate | Lower | Higher | Very High |
| Processing Time | Fast | Moderate | Instant |
| Impact on Investments | No sale | N/A | N/A |
Risks to Consider Before Taking a Loan Against Mutual Funds
Borrowers should be aware that:
- Market fluctuations may impact available credit limit
- Lender may request additional margin in volatile markets
- Non-repayment may lead to fund liquidation
Responsible borrowing is essential.
How Novasure Helps with Loan Against Mutual Funds
- Assistance in evaluating eligible credit limit
- Support during pledge and KYC process
- Transparent explanation of interest and charges
- Guidance on responsible usage and repayment
- Ongoing support throughout the loan tenure
Unlock Liquidity Without Breaking Your Investments
A Loan Against Mutual Funds helps you meet immediate financial needs while keeping your long-term investments intact. Novasure ensures a smooth and transparent process to help you borrow smartly.