Скачать или смотреть Should you take a loan against mutual funds? What is a loan against mutual funds? How does it work?

Loan Against Mutual Funds (LAMF) is a loan offered by banks and NBFC with your mutual fund holdings as collateral. Think of LAMF like a loan against your gold jewellery. Instead of gold, you pledge your mutual fund units.

In India, LAMF is slowly gaining popularity. More banks, NBFCs, and FinTechs have started offering loans against equity and debt mutual funds. These loans are typically short-term, with durations under 12 months.

When you pledge your mutual fund units as security to the lender, they extend a loan to you based on the value of those units. The loan amount usually ranges from 50% to 80% of the mutual fund's value.

So, if you have mutual fund units worth ₹1 lakh, you might be eligible for a loan of ₹50,000 to ₹80,000, depending on the lender's policies.

Check out the benefits and disadvantages, and things to know before taking a loan against mutual funds in our blog.

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