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A Loan Against Mutual Funds (LAMF) is a convenient and cost-effective way to unlock liquidity from your existing investments without redeeming them. A form of Loan Against Securities (LAS), this facility allows you to pledge mutual fund units as collateral in exchange for funds. Whether you need emergency funds, capital for business expansion, or want to seize a short-term investment opportunity, a loan using mutual funds as collateral offers a smart alternative to traditional loans.
As a type of Loan Against Securities, this option offers the dual advantage of preserving your long-term investment portfolio while managing short-term financial needs. Let’s dive into how secured Loans Against Mutual Fund units work, including their key features, eligibility criteria, required documentation, interest rates, and the application process.
Features and Benefits of a Loan Against Mutual Funds
Opting for a Loan Against Mutual Funds has several compelling advantages, such as.
- Quick Access to Funds: Meet urgent financial needs through seamless processing and a fast turnaround time (subject to eligibility and documentation).
- No Need to Redeem Mutual Funds: You continue to earn returns and avoid exit loads or tax implications associated with premature redemption.
- High Loan-to-Value (LTV): Depending on the type of mutual fund and your eligibility, you can typically avail an LTV of 50% to 85%*.
- Interest Rates: Competitive Loan Against Mutual Funds interest rates help optimise the cost of borrowing.
- No Prepayment Charges*: Enjoy the flexibility to repay early without incurring prepayment penalties on your instant loan on mutual funds.
*Terms and Conditions apply.
Eligibility Criteria for a Loan Against Mutual Funds
Our Loan Against Mutual Funds eligibility criteria are simple and designed to include a wide range of investors. Common requirements include:
- The applicant must be at least 21 years of age and provide proof of stable income.
- The applicant must possess a Savings, Current, and Demat Account.
- The applicant must hold approved mutual funds with a minimum value of INR 10 lakhs.
- A credit score of 600 or above is required.
*Please note that this is only the basic eligibility criteria for a loan on mutual funds. The final eligibility will depend on a number of parameters, including the SMFG India Credit’s policy at the time of loan application.
Who Can Apply for a Loan Against Mutual Funds
Our Loan Against Mutual Funds is designed to serve a wide spectrum of borrowers. Eligible applicants may fall under the following groups:
- Individual Investors
Resident individuals who own eligible mutual fund units and meet SMFG India Credit’s eligibility norms. - Non-Individual Entities
Loans Against Mutual Funds can also be availed by the following non-individual applicants:
- Public and Private Limited Companies
- Registered Partnership Firms
- Limited Liability Partnerships (LLPs)
- Private Trusts
- Sole Proprietorships
- Hindu Undivided Families (HUFs)
Documents Required for a Loan Against Mutual Funds
Here are the commonly required documents when applying for a Loan Against Mutual Funds online:
|
Document Category |
Description |
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PAN Card (Mandatory) |
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Proof of Identity (POI) and Proof of Address (POA) Document |
|
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Income Documents** |
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Other Documents (you may need to provide one or more of these) |
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* In line with your Know Your Customer policy
**As applicable
In case you apply with a co-applicant, make sure their basic paperwork, including PAN and KYC documents, is also provided.
Please note that the above list for a loan on mutual funds documents is illustrative. Additional documents may be requested depending on the specific loan product, your profile, and our policy at the time of loan application.
Key Information:
- Ensure that your original ID proofs, address proofs, and other relevant documents are available for onsite verification, unless digital KYC has been used.
- If your address proof does not show your present address, you may provide any one of the valid Deemed OVDs. Click here for the approved list.
- Within three months of submitting your initial address proof, you must furnish an OVD that reflects your current address.
Interest Rates and Charges for a Loan Against Mutual Funds
The interest rates on a LAMF are typically lower than those for unsecured loans or credit card options. At SMFG India Credit, you can avail of floating interest rates on Loans Against Mutual Funds starting from 9.75%* per annum. However, the final rate applicable will be determined by your eligibility, overall credit profile, and the lender’s policies at the time of application.
Apart from interest, you can expect nominal associated costs, such as processing fees, stamp duty/registration (as per relevant state laws), liquidation charges*, annual maintenance/renewal charges, and so on.
It’s important to read the loan agreement carefully to understand all applicable fees and charges, as they can significantly influence the overall cost of borrowing.
*Applicable for Securities in demat form.
How to Apply for a Loan Against Mutual Funds
Applying for a Loan Against Mutual Funds is a digital and hassle-free process at SMFG India Credit. Here’s how it works:
- Click here to initiate your application online..
- Provide your personal details and share the mutual fund information as required.
- A reference number will be generated. Our representative will get in touch with you to take the process forward.
For those who prefer offline applications, feel free to visit your nearest SMFG India Credit branch. You can also reach us at 1800 419 8900 (available from 9:00 AM to 7:00 PM, excluding Sundays, the 4th Saturday of the month, and public holidays) or email [email protected].
Unlock the Value of Your Mutual Funds Today!
A Loan Against Mutual Funds offers a strategic way to meet your short-term financial needs without disturbing your long-term investment goals. With straightforward eligibility, minimal documentation, and competitive interest rates, it’s an ideal solution for individuals looking to unlock liquidity while continuing to benefit from their market portfolio.
If you're exploring options for pledging mutual funds for a loan, consider SMFG India Credit’s Loan Against Securities, ranging from INR 5 lakhs to INR 20 crore*. Apply online today or get in touch with us to learn more.
* Please note that loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms and disbursal process will be subject to SMFG India Credit's policy at the time of loan application. If you are an existing customer and wish to foreclose your loan, please note that foreclosure terms and charges will be applicable as per our policy at the time of loan foreclosure.
FAQs
Which funds are accepted under a Loan Against Mutual Funds?
Typically, SEBI-approved schemes – including equity, debt, liquid, or hybrid mutual funds – are accepted. It's best to check with your lender for their approved list.
What is the loan-to-value offered against the mutual funds provided?
LTV generally ranges from 50% to 85%* of the NAV, depending on the scheme type and the lender’s policy.
Is it possible to make a part prepayment/foreclosure before the end of the loan tenure?
Yes, most lenders allow prepayments or foreclosure with no charges*.
I need more funds against the mutual funds already lien-marked. How can I raise a request for additional disbursement?
You can request a top-up by submitting an updated NAV statement and raising the request through the lender’s app or portal. However, the final approval is at the discretion of the lender.
This facility is currently unavailable. We regret the inconvenience caused. In case of any queries, please call us on 18001036001 or write to us at [email protected]