Last Updated on Dec 20, 2024 by Ayushi Gangwar
Q: What is the monthly instalment on a Rs.1 lakh loan against mutual funds (LAMF)?
In LAMF, borrowers pay only the monthly interest on the loan amount. For a Rs. 1 lakh loan, the annual interest rate is 10.75%, which results in a monthly interest payment of Rs.896. This is lower compared to traditional loans where both interest and principal are paid monthly.
Monthly payments for different loan amounts
| Loan amount | Interest rate | Monthly installment |
| Rs.25,000 | 10.75% | Rs.224 |
| Rs.50,000 | 10.75% | Rs.448 |
| Rs.75,000 | 10.75% | Rs.672 |
| Rs.1,00,000 | 10.75% | Rs.896 |
Note: For illustration purposes only. The borrower also has to repay the principal amount within the 3 years which is not a part of monthly payments.
Q: Does the monthly payment include the principal amount?
No, the monthly payments cover only the interest. The principal repayment can be done at any time within the 3-year tenure.
Q: Can I make partial principal repayments?
Yes, you have the flexibility to make partial principal repayments during the 3-year period. Each principal repayment reduces the interest obligation. For example, if you have taken a loan against mutual funds for Rs.1 lakh in January and you repay Rs.50,000 in February, your outstanding principal drops to Rs.50,000, and from the next month onward, your monthly interest payment is halved to ~Rs. 448. You can consistently reduce the principal amount at any point, thereby lowering your monthly payments.
Q: Are there prepayment charges?
No, there are no prepayment charges or foreclosure charges for early repayments of the principal amount.
- Is LAMF a better alternative than breaking investments? - Dec 20, 2024
- Loans Against Mutual Funds: A New Offering from Tickertape! - Dec 20, 2024
- Understanding monthly instalments on LAMF in 1 minute - Dec 20, 2024
