Last Updated on Dec 20, 2024 by Ayushi Gangwar
At Tickertape, we have always been committed to building a simple investment analysis experience for all retail investors. Now, we are launching a new offering to help you do more with your investments with Loan Against Mutual Funds!
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Introducing Loan Against Mutual Funds on Tickertape!
Tickertape, in collaboration with smallcase has launched Loan Against Mutual Funds which may offer several benefits to individuals who are looking to meet their financial needs without selling their mutual loan investment.
What is a Loan Against Mutual Funds?
Similar to how you can take a loan against any collateral (gold, house, etc.), you can also take a loan against your Mutual funds (MFs) as collateral at a very competitive interest rate – in Tickertape, this interest rate is at 10.75% per annum.
Which is Better – Breaking Investments or Taking a Loan Against Investments?
By breaking your investments, you are stopping compounding from doing its magic. It’s better to not hamper your long-term wealth journey for an immediate financial need. You can take advantage of your investments as collateral and take a loan against them while continuing to reap the benefits of your investments.
Who can Take a Loan Against Mutual Funds?
Any user who has mutual fund holdings can take a loan against their Mutual funds. There are no minimum credit score or other income requirements to be eligible for this loan.
What is the Mutual Fund Credit Limit?
A Mutual Fund (MF) credit limit is a loan that you can take against your MF investments as collateral. It’s calculated as a % of your investments based on the credit policy of the lender.
For example, an investment of Rs.1,00,000 in a NIFTY Index Fund can give you an MF credit limit of approximately Rs.45,000-Rs.50,000. An investment of ₹1,00,000 in a Liquid Fund will give you an MF credit limit of Rs.75,000-Rs.80,000. Debt MFs give you a higher credit limit because they are generally less volatile than equity.
The minimum credit limit required to take a loan is decided by the lender, and currently, it’s defined at Rs.25,000.
What Can You Use a Loan Against Mutual Funds For?
You can take a LAMF for a variety of reasons, some of the use cases include :
- Lower interest rates than most loans
- Downpayment for high-ticket loans like house loans, car loans, etc.
- High-ticket expenses like wedding expenses, medical expenses, etc.
- Refinancing an existing loan courtesy of lower interest rates offered by this loan
- A credit line that allows users to withdraw funds anytime and pay interest only on withdrawn funds
How is a Loan Against Mutual Funds Different from a Personal Loan?
The key differences between Digital Loan Against Mutual Funds & Personal lien marking loans are basis the following two parameters –
- Lower interest rates: LAMF generally offers a more competitive interest rate than Personal Loans
- Only interest payment every month: In Personal loans, you have to pay a part of the principal amount and interest every month in the form of an EMI.
In the case of Loans Against Mutual Funds, you pay only the interest every month with the freedom of paying the principal amount anytime you want at no extra cost.
What are the Criteria for Eligibility for a Loan Against Mutual Funds at Tickertape?
Unlocking a mutual fund loan with Tickertape is easy. Whether self-employed or salaried, residents of India aged 18-70, can apply for loans up to Rs.5 Crore against approved Mutual Funds held with CAMS & KFintech.
What are the Documents Required to Take a LAMF at Tickertape?
Mutual fund documentation varies among banks, with key documents like identity, address, employment proof, and ownership confirmation.
Opting for a loan against MF on Tickertape?
Enjoy a hassle-free process with no detailed document requirements—get funds with zero formalities!
How to apply for a Loan Against Mutual Funds?
You can get a LAMF through a completely paperless & digital process that can be completed in 5 minutes on the Tickertape app.
Here are the steps to follow –
- Login on the Tickertape app
- Connect your Mutual Funds holding on the Portfolio tab
- Go to the More tab, click on Loan Against Mutual Funds
- Check your MF credit limit
- If logged in on smallcase, pledge the holdings depending on the loan amount
- Sign the loan agreement
- Get cash in your bank account within 2 working hours
How Can You Close the Loan?
You can close the loan anytime at no extra charges after paying back the principal and any interest that may be due for that month.
After paying back the principal & any interest due, you have the option to retain the MF credit limit and withdraw funds again whenever you need them. You will pay interest only when you withdraw the funds otherwise you will continue to pay ZERO interest.
If you want, after loan closure you can also get the collateralized MFs unpledged, which will allow you to redeem/sell these MF investments.
What more can I do with Mutual Funds on the Tickertape Platform?
Along with taking a Loan Against Mutual Funds, you can now also start tracking the performance of tour portfolio with all your assets including Mutual Funds, stock & ETF holdings and Gold. With features like scorecard, Diversification score and Screener, you can track and manage your investments.
You can track your net worth by following the below steps :
- Go to the Portfolio tab
- Import your Mutual Fund holdings
- Import your stock & ETF holdings by connecting your demat account
- Track your overall & asset-specific net worth
We are just starting to build out the Loan Against Mutual Funds offering, so we would love to hear your feedback & queries. Please drop us your questions or suggestions at support@tickertape.in.
To know more about Loan Against Mutual Funds on Tickertape, please refer to the FAQs below or a more detailed list of questions here.
FAQs
1. How much loan can I get?
You can avail a loan against mutual funds from Rs. 25,000 to Rs. 5 crore.
2. What will be the interest rate?
The interest rate of 10.75% p.a. is applicable on the outstanding principal. No interest rate is charged for the repaid principal amount.
3. What are the minimum and maximum required age for availing a Loan Against Mutual Fund?
To avail LAMF, an individual should be between 18 years to 65 years of age.
4. Where can I find the approved list of mutual funds that I avail LAMF against?
Easily obtain a loan against your mutual funds online. You can explore mutual fund schemes on the smallcase app for a convenient overview.
5. Can I avail Loan Against Mutual Funds held in demat form?
No, you cannot obtain a lien marked or otherwise loan against mutual funds held in demat form. The funds must be in the Statement of Account (SOA) form with RTAs like CAMS or KFin.
For more information on Loan Against Securities & Loan Against Mutual Funds;
Check smallcase for more information on offers quick and easy disbursement of loans against securities ( LAMF), all about eligibility, documents, features and benefits of Loan against mutual funds and the process for applying for Loan is just one click away –
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