Now, you can get a loan against your mutual fund. Good idea or bad?

Are you in need of urgent money? You can now take out a loan against your mutual fund investment. This facility - known as loan against securities - allows investors to get instant loans at a 9-11 per cent interest rate by keeping their equity/debt mutual fund or stock investment as collateral. Only tax-saving fund holders are not permitted to avail of this feature. How much loan you can get Anything between Rs 10,000 and Rs 3 crore. How does it work For equity mutual funds (barring tax-saving funds), the loan-to-value (LTV) is 45-50 per cent. So, if an investor has an equity fund of Rs 2 lakh and wants to pledge their entire holdings, he can get a total loan of up to Rs 90,000. Debt mutual fund investors can get a loan of up to 80 per cent of their total investment. Loans can also be disbursed against your stock investment. You can get a

This article was originally published on December 15, 2022.