Loan against securities involves the process of allowing you to borrow loans by parking your mutual funds with a bank as collateral. Now the good part about loan against mutual fund is that the loan granted to you is backed by a tangible asset. This results in the interest rates been lower than that of a personal loan.
The loan amount that can be borrowed from a loan against securities ranges from Rs25000 to Rs 5 crores. The processing fee involves 0.25% to 1% of the loan amount. The procedure of working is as follows. Every financial institution comprises of a panel of approved mutual funds. So, if you have that mutual fund, that the bank approves of, you can enter an agreement of exchanging that mutual funds with the requested loan.
The loan amount that can be procured is typically 50% of the net value of the mutual fund units that are given to the bank and close to 70 to 80% in case of debt funds. Now, most of you must be wondering how one takes a loan against the mutual fund. Here is the procedure for the same.
If you are holding the units in a Demat form, sanctioning loans on online portals become convenient. Alternatively, if you hold the unit in a physical form, banks can enter into a loan agreement with the financer. The lender then asks mutual fund registrar to impose a lien on the number of units being pledged. The lien is marked by a registrar and the letter is sent to the lender with a copy to the borrower confirming the lien.
What should be noted is that the lien is marked against the units and not the amount. One cannot redeem the units before the loans are completely repaid. JMFL financial institute can help you acquire a loan through a loan against securities. If you have the need and urge for having a loan and do possess asset in the form of mutual funds, JMFL professionals will help you acquire the loans in a systematic matter. Get in touch with JMFL financial through their website and also see a gamut of offerings they serve.
