As the name suggests, a loan against mutual funds units is one where your mutual fund investment is used as security against the amount lent to you. Mutual funds are gaining popularity with Indian investors as they give you good returns and you can manage them from your smartphone, and this is one more reason why they are a loved choice.
A loan against mutual fund units lets you avoid the need to sell units to get the required liquidity. Further, your funds will not only remain intact but will also grow during the loan tenor.
So, here are 4 tips to follow to get approval for an outstanding loan against mutual funds:
Develop A Strong Investment Portfolio
Having a robust portfolio is vital to you actually getting the loan amount you desire. The higher the market value of the mutual fund units you hold, the higher is the loan amount you will receive. For instance, Bajaj Finserv Loan Against Mutual Funds gives you a loan-to-value ratio of 50%. This ratio is the value of the loan offered to the value of the assets pledged. So, having units worth Rs.2 crore, for example, will fetch you a maximum loan amounting of Rs.1 crore. Similarly, if your units are worth Rs.3 crore, your loan sanction will be around Rs.1.5 crore.
Maintain A Good Credit History
Your credit history directly impacts not only your chances of getting the loan but also of getting the best interest rate possible. If you have a good credit score, the lender will be more likely to trust your repayment abilities. Your past track record will reassure the lender that you will not default, and so, a loan will be given to you at the best possible interest rate.
Conversely, if you have a bad credit score, the lender might view you as a risky applicant. To minimise any losses that might occur due to you defaulting, the lender will charge you a higher interest rate.
Verify That The Units Comply With The Lender’s Scrip List
Being market-linked instruments, mutual funds are susceptible to fluctuations in value. Since these units are the collateral for the loan, lenders try to be absolutely sure about the stability of the securities pledged. To do this, they will give you details of accepted mutual funds in the form of scrip lists. Only the units belonging to the lists will be accepted and others won’t be. Since your loan amount is directly related to the value of your units it is important to look into this aspect.
Apply Online Or At Authorised Offline Centres
Applying for a loan against mutual funds is easy and can be done either online at the lender’s customer portal or offline at the nearest authorised centre. For instance, if you want to apply for a Bajaj Finserv Loan Against Mutual Funds online you can do so by filling out a simple application form. Alternatively, you can get offline assistance by either calling 9211175555 or sending ‘SOL’ as an SMS to 9773633633.
When looking for a lender that gives you a high loan amount at an affordable loan against mutual funds interest rate, you need not look further than Bajaj Finserv. A Loan Against Mutual Funds by Bajaj Finserv lets you avail up to Rs.10 crore for a period of 12 months. The loan comes with convenient repayment features like Flexi Loan facility.
Here, you only have to pay interest on the amount utilised and not on the entire sanction. Further, should you receive funds during the tenor, you can foreclose the loan at no extra charge. Best of all, you can quicken the process of getting an impressive loan against mutual fund units by checking your pre-approved loan offer in under a minute!.