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You can get a loan against mutual funds in a financial arrangement where you can borrow money using your investments as collateral
It allows you to access liquidity without selling your mutual fund investments. This can be useful for meeting urgent financial needs while continuing to benefit from the potential appreciation of your investments
The amount you can borrow typically depends on the value of the mutual funds you pledge as collateral. Lenders often provide a percentage of the current value, usually around 50-80 per cent
The interest rates on such loans are generally lower than unsecured loans but can vary depending on the lender and your credit profile
The loan must be repaid according to the agreed terms. Repayment schedules can vary, but adhering to them is crucial to avoid penalties or forced liquidation of mutual funds
To get a loan against mutual funds, you typically need to approach a financial institution or lender that offers this service. They will assess your mutual fund holdings, evaluate your creditworthiness, and then provide the loan based on their criteria