Loan Against Mutual Funds - A Complete Guide | How to Apply | Eligibility | Interest Rate | ETMONEY
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- Опубликовано: 6 авг 2024
- Emergencies can happen anytime and one can fall short of money in the short term. A loan against mutual funds can help you in such situations. You can avail the money without redeeming your mutual funds. In this video, we shall look at Its many details including its eligibility, loan limits, how to apply, how to access, interest rates, and a lot more
Topics covered:
00:00 - INTRODUCTION
01:11 - BASICS OF LOANS AGAINST MUTUAL FUNDS
02:28 - WHO IS ELIGIBLE FOR A LOAN?
05:18 - HOW IS THE LOAN LIMIT CALCULATED?
07:24 - HOW TO ACCESS THE LOAN?
10:15 - HOW TO APPLY FOR A LOAN AGAINST A MUTUAL FUND?
11:34 - WHAT IS THE INTEREST CHARGED?
13:51 - SUMMARY
The workings of a loan against a mutual fund are pretty standard and can be summed up in three steps:
Step 1 - Estimating your eligible loan limit, which is done based on your mutual fund corpus
Step 2 - Pledge your units in favor of the loan provider, who then sets up a lien or a legal claim over those units in the system
Step 3 - Loan is granted
In case you are unable to pay the loan, the loan provider retains the right to sell these units to recover their money
👉 WHO IS ELIGIBLE?
Anyone over the age of 18 years with money invested in mutual funds can apply for a loan .. but the final disbursement is always subject to certain conditions and criteria as defined by the loan provider
- Equity - Only for Individuals to apply
- Debt funds - Individuals, Partnerships, Hindu Undivided Family, sole proprietors, and even companies can apply for these loans.
Financial institutions offer the loan against mutual funds facility
Popular banks like the State Bank of India, HDFC Bank, ICICI, Axis Bank all offer this product .. as do the bigger NBFCs like Bajaj Finserv, Tata Capital, and Fullerton India
👉 HOW IS THE LOAN LIMIT CALCULATED?
The amount of loan that can be offered largely depends on two factors -
1. The type of mutual fund scheme
2. The internal policies of the loan provider
With regards to the type of scheme, all institutions apply different limits on debt and equity funds.
- For Debt Funds - most banks and NBFCs offer a loan limit of up to 80% of the net asset value
- For Equity funds - The loan limit is generally around the 50% mark
👉 HOW TO ACCESS THE LOAN?
The bank would open up a current account for you and allot an overdraft limit to that account. which means if you need the money, you can withdraw it or transfer it from this current account.
👉 HOW TO APPLY FOR A LOAN AGAINST A MUTUAL FUND?
1. Offline method which requires applicants to
- Approach a bank or an agent
- Submit KYC documents like address proof, photograph, etc.
- Submit a mutual fund holding statement
- Sign a pledge form
- Submit an income proof such as Form 16, ITR, etc
2. The faster and easier way of applying and receiving a loan is of course doing it online. Several financial institutions have already integrated their systems with registrars like CAMS .. which means marking a lien on specific schemes is now a matter of seconds
👉 WHAT IS THE INTEREST CHARGED?
Loan providers charge an interest rate on your loan amount or the utilized part of your OD account. This interest rate is almost always lower than the personal loan interest rate. Banks charge interest rates after considering several variables. The rate varies from bank to bank, but one can typically expect an annual interest rate of 10 to 12%.
In addition to interest rates, there are some additional charges.
1. Processing fee
2. Annual maintenance fee
3. Renewal charge
👉 Check out EMI calculator: www.etmoney.com/tools-and-cal...
👉 SUMMARY
Here are the 10 points one needs to consider when obtaining a loan against mutual funds
1.Which lending institution to approach
2. Do you have any special eligibility requirement like a HUF, partnership, or company
3. What are the minimum and maximum loan amounts offered
4. Which is the approved list of mutual fund schemes
5. The percentage of NAV offered for equity and debt schemes
6. Whether the lender offers an overdraft or if they offer a regular loan
7. Offline versus online application
8. The speed of disbursing of loan .. the faster, the better
9. The Interest rate charged on the loan
10. the service charges
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This channel is the best for mutual funds!
Thank you for your kind words.
Very authentic channel having a authentic anchor. Hats off to you
I learned something completely new today. Thank you so much
You are most welcome!
Beautifully explained...
Cheers.
This is really a great video that covers all the areas we need to consider without searching any other place for additional information!! Appreciate all your efforts in putting everything together!!
Glad it was helpful! Thank you for your kind appreciation
Sir, you are a boon to many people like me who know very little about things like these.
As always great video. Hope you keep up the good work. 🙏🙏
Thanks for the appreciation!
Highly informative video. Another point to ponder - selling a MF unit may lead to capital gains as well which may be a deterrent..
It's good... But you should tell more about how to repay that loan using mutual fund which was used
Deep dive insight .Thank you sir!
Thanks for the appreciation, Prakash Raghunathan
Thanks for touching unpopular information.
It's really informative I didn't know about this before.
Thanks for educating us🙏
Thanks for liking
Please make a guide on how and when to do SWP and STP.
This is a wonderful new information to me. Thanks.
Our pleasure!
This much knowledge,no bank person have idea about loans
Glad you found it useful!
Thanks for the detailed video.
Glad it was helpful!
Keep up the good work!
Thx!
Very informative video ... Thanks for sharing , can you advice any few list of index fund to invest and take a OD limit on the funds ... you can make video on this tooo... That will be great ....
Deep and Informative video.. Great content...
Thank you very much
Thank you for sharing valuable information
Glad it was helpful!
Thanks for the useful and informative video..
Glad it was helpful! Thanks Krishna Chaitanya
Great work by ET Money Team
Thank you
Brilliantly explained 👍👍
Thank you 🙂
Thank you so much
Any time, Prabhu Prasad
Does Groww and ET money provides Loan on mutual fund ?
sir I am started SIP from emoney...pls suggest me which index fund is better.
Hello ETMoney, Nice video. One question - Can we apply for "student loan" with mutual funds as a collateral? Any idea which institution can offer student loan against MFs?
Useful information 👍
Thanks for liking
Very useful
Thanks a lot
I think even after collateral of mf units, interest rates seems similar to regular personal loan's.
if I invest in mutual funds through etmoney, who keeps my units record apart from AMC.( like shares record ndsl or cdsl keeps it likewise MF).
how can i sell my mf small parts of units incase of emergency through ETMONEY.
THANKS FOR your videos, it is really useful for us
Mirai assert which bank can give loans??
Its better to redeem mutual funds..
SIR, Can we trust finezzy for LAMF??
As you told to approach different institutions then whether it will affect the CIBIL Score? Normally number of loan enquiries are affecting the CIBIL Score. Please confirm.
Kindly check the CIBIL or Experian website for specifics on this
Can I keep investing in the MF against which loan is taken? If so, will the overdraft limit increases as the invested amount increases?
Loan is given against a number of units. This does not stop you from buying more units in that MF scheme. You'll have to check with the bank/lender on if this will lead to a consequent increase in OD limit (we have our doubts)
Possible to get loan against mutual funds doing stp..
👍👍
How to repsy method not explained.....
👍
Can u please also tell us the list of banks or nbfcs which offer loan on mutual fund.
And also please confirm if ELSS mutual funds are applicable for this
Yes, ELSS funds are accepted by some financial institutions. Please search for "loan against mutual funds" or "loan against securities" on google.com, you'll get an updated list of institutions offering it
@@ETMONEY I have googled it but found no where.
Checked with Sbi bank, kotak bank, hdfc bank, fullerton , Icici bank.
None of the above banks offer loan on ELSS fund.
When asked they said that these have lock in period so lien cant be applied on this.
But i request you to please let me know if there is any bank of NBFC which offers such loans on ELSS mutual fund. (Which has a lock in period of 3 years)
Isn't Axis AMC registered in CAMS? If no, how do I get my axis MF holdings in CAMS statement?
1. Axis MF is KFintech
2. Consolidated statement gives CAMS & KFintech info
Thanks for explanation@@ETMONEY
Let me paraphrase for better understaindg. Axis is not registered directly to CAMS but registered to KFintech. And KFintech is registered to CAMS.
That is why I can get the MF holdings in CAMS report but I can't get a loan from ICICI because Axis is not directly registered on CAMS. Am I correct?
Does mutual Fund units be in demate account to get loan against units.
Dont think so. We didnt come across nay such reference on any bank or NBFC material
Can NRI with mutual fund in India apply for these loans?
Yes
Can we get loan against ELSS mutual funds?
No
I have redeemed from PGIM PORTFOLIO on Friday 18th June 2021, but till today the funds are not credited in my account number.
Debt fund?
@@rohanshinde4327 No. Fund Direct-Growth
It will by monday
Which fund exactly?
@@rohanshinde4327 PGIM India Global Equity Opportunities Fund Direct - Growth
Sir can I get loan on ELSS mutual fund with Aditya birla
Kindly check with the lender
isnt it better to sell the mf units instead of pledging it... rather than paying the interest along with emis, isnt it better to do an sip on mfs with that amount??? Very informational video as always🙏
Wont generalize it. E.g. say, the markets have dipped by 20% (UKR-RUS war) and you needed some money at the same time. With experience, you know that markets come up with a few months (happened in 2008, in 2016 and in 2020). How comfortable are you to sell your MF investments at this 20% dip knowing that it's a 20% loss?
@@ETMONEY true in that scenario... But isn't that a rarity... In normal situations, isn't it better to sell your existing units in case of an emergency rather than pledging it???
@@vivekjimkoshy6638 It'll change from individual to individual. For instance, I'll redeem debt units if holding is over 3 years instead of taking a loan. However if debt holdings are within 3 years, then will do a rethink. With equity, annual expectation is 12% if not more. Depending on my outlook, I would take that. I haven't had to myself take a loan but my relative has so speaking from his experience. As I said, views can change but I don't want to put myself at a disadvantage by generalizing it
@@ETMONEY True that... It might boil down to individual choices and situations... Thank you so much for replying 🙏
There is no information on MF ETFS
Aap se request h ke videos hindi me ho to jayada acha h
Useless... Simply tell how we can take loan
Can I get loan against ELSS Funds?
Yes. You'll have to check with the loan provider for a list of approved schemes though.