There will be times when you must be facing some financial crisis but all the lending options will be quite out of your league. Maybe the documentation process, the eligibility criteria, or just the rate of interest won’t match your need. But people forget that there are other lending options available in the market apart from general ones like personal loans or credit cards. One such option is Loans against mutual funds. Yes, you heard it right, now you can avail of a loan even on your mutual funds without even selling it.
In general, it is always a good practice to save some of your income or invest in something that will benefit you and your family in the times to come. So, in times of emergencies, if you are facing problems with your finances and need some cash immediately, there will be options available for you that will help you meet your expenses without harming your funds. If you have taken on the task of tiding over financial difficulties on your own, then surely you need to opt for loans against mutual funds rather than getting into debt or other more complicated issues later. But stepping into it without knowing all the basics can lead you to make some wrong decisions. So let us introduce you to all the general information you need to know first.
What is a Mutual Fund?
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. In other words, mutual funds are just like specially designed portfolios that have been created by experienced professionals such as portfolio managers. A mutual fund gives you the opportunity to get involved in investing with relatively little effort, with someone else picking out the specific investments for you.
Mutual funds can be a great way for new investors to start building wealth. They’re widely diversified and professionally managed, which helps mitigate risk. But before you invest in mutual funds, it pays to understand them better.
What is Loan Against Mutual Fund?
Are you looking for an easy way to get cash when the need arises? A short-term loan against your mutual fund, also known as a Digital Loan Against Mutual funds, is a perfect solution that provides instant funds on the same day. The beauty of this loan structure is that you get cash from an online facility without worrying about pledging your units or documents. You also save yourself from the burden and stress of multiple paperwork and tedious documentation.
There are times when you need money urgently but either don’t have any assets to offer as collateral or don’t want to lock up your cash in the form of fixed deposits (FDs). Under such circumstances, one of the best options is taking a loan against Mutual Funds (MF). This can be quite useful if you are planning a dream vacation or want to buy a car. But it is important to have some knowledge about this loan and its eligibility criteria. Read on for more details.
How Can You Get a Loan Against Your Mutual Funds?
Nowadays, investing in mutual funds has become hassle-free. You can even do it from your home! Here are the steps you need to take to get started.
*Considering you already own Mutual Funds or any other security
Step 1: Visit this link: Loan against Mutual Fund
Step 2: Fill in your Full Name and Contact Number
Step 3: Now fill in the OTP that has been generated on your given number
Step 4: Once you submit the OTP you will be directed to the Loan against mutual fund partner of ReferLoan.
Step 5: Here, you will have to sign up for your account via your Aadhar-enabled mobile number.
Step 6: To proceed further, submit your KYC documents or fill them all out fresh.
Step 7: Now you will have to mark a lien on the mutual funds or shares starting at Rs 15,000.
Step 8: Voila! Once your application gets approved your loan amount will be disbursed to your account within 4 hours.
FAQs
A systematic investment plan is a method of investing offered by many mutual funds. It allows investors to invest small amounts periodically instead of all at once.
The types of Insurance of Mutual Funds based on the objective of investments are:
- Growth Funds
- Liquid Funds
- Income Funds
- Tax-saving Funds
Yes, it is safe to get a Loan against a mutual fund as you can get financial support in need without selling or losing your mutual funds.
If you pledge your Mutual Fund units as collateral, the bank will hold them as a security for the loan. The bank will continue to earn returns on your investment, but you cannot sell your units while they are pledged to the bank.
In the case of equity mutual funds, you can borrow up to 50% of the net asset value. In the case of fixed-income mutual funds, you can borrow up to 70–80% of their net asset value.