Loan Against Mutual Funds
R@hul Potu / 05 Sep 2024/ Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund
Loan against mutual funds was an interesting topic covered in the last edition.
Loan against mutual funds was an interesting topic covered in the last edition. But what are the criteria an investor should look into while availing of loans against MFs? - Dhanashri Kamble [EasyDNNnews:PaidContentStart]
Editor Responds : Thank you for writing to us. Availing of a loan against mutual funds is a smart way to access funds without liquidating your investments. However, not all mutual funds are eligible for such loans. Equity and debt mutual funds qualify, but some categories like liquid funds or ELSS may not. The loan-tovalue (LTV) ratio is another crucial aspect, as it determines the amount you can borrow against your holdings.
Interest rates on loans against mutual funds are usually lower than those for personal loans but can vary between lenders. Comparing rates is essential to secure a favourable deal. Additionally, consider the loan tenure, which typically ranges from one to three years. Market fluctuations pose a risk, as a significant drop in the value of your funds could trigger a margin call, requiring additional collateral or partial repayment. While loans against mutual funds offer a flexible financing option, they require careful consideration.
[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]
To read the entire article, you must be a DSIJ magazine subscriber.
Current print subscribers click here to login
Subscribe NOW to get DSIJ All Access!
[EasyDNNnews:UnPaidContentEnd]