Are you looking to raise quick funds and don’t want to sell off your assets?

If you have mutual fund investments, you can avail a loan without liquidating them. This way, you secure funds while keeping your long-term investments intact.

This means you’re about to find a way to procure funds and leave your long-term investment goals untouched. Find out how to avail of a loan against mutual funds. This blog breaks down the entire process for you. Read on.

What is a Loan Against Mutual Funds?

The idea is simple. It’s similar to applying for a loan against any other asset. The only difference is that here you have to offer your mutual fund investments as security to the lender against your loan amount. As a next step, the lender will identify the current market worth of your investments. This value will help determine the total amount that can be offered on loan. This is the right choice for you if you seek short-term funds. An added advantage is that the interest on loan against mutual funds is lower than for personal loans.

Key Highlights:

• Loan amount depends on your mutual fund value.

• Lower interest rates than personal loans.

• Ideal for short-term financial needs.

Loan Against Mutual Funds Eligibility Criteria

Some conditions need to be met:

• Ownership: You must solely or jointly hold the mutual fund

• Mutual Fund Type: Equity and debt mutual funds usually qualify. However, not all schemes are eligible. Check with your lender.

• KYC: Update your KYC (Know Your Customer) details.

• Minimum Value: Most lenders require a minimum portfolio value. Make sure this criterion is met before you apply.

Documents Required for Mutual Fund Loans

To apply, you’ll need:

• Your proof of identity (Aadhaar card, PAN card/passport)

• Proof of residence (Aadhaar card/utility bills)

• Mutual fund account statement

• Proof of income (sometimes)

• KYC compliance documents

Step-by-Step Process to Take a Loan Against Mutual Funds

• Determine Your Loan Requirement - How much money do you need? Confirm if your mutual fund portfolio meets your requirements. Remember, lenders usually offer loans for 50-80% of your invested amount.

• Choose a Lender - Start your research by investigating lenders or using fintech platforms like MyFi. Compare terms, interest rates, and processing fees. MyFi can help you do it quickly.

• Check Your Mutual Fund Eligibility - Not all mutual funds qualify. Confirm your scheme’s eligibility with the lender. This is a crucial part of the loan against mutual funds process.

• Apply for the Loan - Start the process online or offline. Platforms like MyFi let you do it digitally. Provide your mutual fund details and other required information. Knowing how to take out a loan against a mutual fund is key.

• Lien Marking - The lender will mark a lien on your mutual fund units. What does that mean? You can’t sell or redeem them until you repay the loan. Don’t worry - they’re still in your name.

• Loan Approval and Disbursement - Following the lien marking, the lender examines your application. The loan amount gets transferred to your account post-approval.

• Repayment - Repay the loan in EMIs or as a lump sum. Once it’s paid off, the lien is removed from your mutual fund units.

This entire loan against mutual funds process is designed such that it is effortless and easy to deal with, resulting in you having a seamless experience.

Interest Rates on Loans Against Mutual Funds

What about the interest? The interest rate of a loan on mutual funds can fluctuate based on:

• The type of mutual funds pledged.

• Lender’s policies.

• Market conditions.

However, interest rates are usually lower than personal loans. Comparing different lenders through MyFi helps secure the best rate.

Benefits that Taking a Loan Against Mutual Funds has to Offer

• Quick Processing: Fewer documents. Faster approvals.

• Lower Interest Rates: Way better than personal loans.

• Retain Investments: No need to sell your mutual funds. They keep growing.

• Flexible Repayment: Choose terms that suit you.

• No Prepayment Penalty: Many lenders let you prepay without charges.

Why Use MyFi for Loans Against Mutual Funds?

Here’s what MyFi can help you with:

• Convenient Application: Apply online. No branch visits.

• Instant Eligibility Check: Check your loan eligibility and portfolio value instantly.

• Competitive Interest Rates: Get the best rates tailored for you.

• Expert Guidance: MyFi answers all your questions. Confused? Ask away.

• 24/7 Monitoring: MyFi tracks your portfolio and loan status.

Loan Against Mutual Funds – An Excellent Choice for Existing Investors!

A loan against mutual funds is a smart way to meet financial needs without having to sell them. By following this step-by-step process and leveraging MyFi’s support, you can access quick and affordable credit while keeping your financial future secure.

Get started with MyFi today and unlock the value of your mutual fund investments effortlessly!

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FAQ:

How long does it take to get the loan?

With platforms like MyFi, you can get instant cash in 10 minutes to 2 hours.

Can I get a loan against mutual funds with a joint account?

Yes, but all account holders must be in complete agreement with the loan and lien marking.

What happens if I default on the loan?

The lender can sell your pledged mutual fund units to recover their amount.

Is there a minimum loan amount?

Yes, most lenders have a minimum limit. Check with your lender or MyFi for details.

Can I pledge SIP investments for a loan?

Yes, if they meet the lenders’ criteria, you very well can.