Loan Against Mutual Fund (LAMF)

In the realm of personal finance, individuals may find themselves seeking funds for various reasons, whether it’s funding a dream vacation, financing a business venture, or managing unexpected expenses. While traditional loans have long been the go-to option, a lesser-known alternative that offers flexibility and convenience is a loan against mutual funds. At PrudentFP, we offer you a new concept of loan against mutual funds, its benefits, considerations, and how it can be a valuable financial tool for our investors.

A loan against mutual funds is a financing option where you can borrow funds by pledging your mutual fund investments as collateral. Rather than liquidating your investments, you can leverage the value of your mutual fund holdings to access funds while keeping your investments intact. The loan amount typically depends on the value of the mutual fund units pledged, and the interest rate charged is generally lower compared to unsecured loans.

Benefits of Loan Against Mutual Fund

Retain Investment Growth: By opting for a loan against mutual funds, you can avoid the need to sell your investments prematurely. You can continue to benefit from potential capital appreciation and earn compounding returns on your mutual fund holdings while meeting your financial requirements.

Quick and Convenient: At PrudentFP, we provide an online streamlined and hassle-free process for application and approval process,it is generally faster compared to traditional loans, as the lender already has the collateral in the form of the mutual fund units.

Lower Interest Rates: Loans against mutual funds usually come with lower interest rates at 10.49%, even if you have a low CIBIL score compared to unsecured loans. Since the collateral mitigates the lender’s risk, they can offer more favorable terms and conditions, resulting in reduced interest costs for borrowers.

Flexible Repayment Options:You have the flexibility to choose from various repayment options, such as regular monthly installments or a bullet repayment at the end of the loan tenure. This enables you to align the repayment structure with your financial capabilities and goals.

No Tax Implications:If you redeem or sell the mutual funds, long-term and short-term captial gain tax,as the case may be, may attract to the tune of 10% to 20% on any arising of gains on your redeemed mutual funds but while encashing the fund loan against mutual fund, you don't need to worry about taxation perspeective as you woudld not pay any taxes on loan against mutual fund.

Conclusion

A loan against mutual funds can be an effective financial tool for individuals seeking liquidity without selling their investments. It offers flexibility, lower interest rates, and quick access to funds, making it an attractive alternative to traditional loans. However, borrowers should carefully consider the risks involved, including market volatility and the impact on investment

Disclaimer

We do not promise that the investments you make based on this plan will be profitable. Investments are always subject to various market, currency, and economic, political and business risks. We will not be liable for any losses that may be caused directly or indirectly by such investment decisions. Let's Start Here