Loan against Mutual Fund #loan #money #finance #education

⭐️Individual investors, NRIs, firms, HUFs, trusts, companies and any entities can avail loan against mutual fund investments. Minors are not eligible. Quantum of loan, tenure and interest rate are determined by the bank/fi nancing institution on the basis of various factors as well as the credit score of the applicant.

🔸 How much loan can be availed?

In case of equity MFs, loan can be availed up to 50% of the net asset value. In case of fixed income mutual funds, one can avail loan to the tune of 70–80% of net asset value.

🔸 Process

To avail loan against mutual funds, the investor can approach the financing institution or bank and apply for the same. Many fi nance companies also provide online applications that facilitate the entire process online and give approval instantly. Lien marking of units is also done online through the mutual fund registrar’s records.

🔸 Costs

Rate of interest for loan against mutual funds is on the lower side as compared to a personal loan as there is a collateral. Processing fees or foreclosure fees are minimal or waived off.

- Points to note:

➡️If partial loan has been repaid, that proportion of mutual fund units may be made free from lien.

➡️Mutual fund investments continue to earn dividends and appreciate while the lien is marked.

➡️Once lien is marked in favour of the bank/fi nancial institution, these units cannot be redeemed by the investor.

Source: Economic Times
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#loan #loans #banks #mutualfunds #investingforbeginners #collateral