Loan Against Securities
A Loan Against Securities (LAS) allows you to pledge your existing financial assets, such as mutual funds and shares, as collateral to secure a loan. This type of loan is typically offered by banks, financial institutions, and non-banking financial companies (NBFCs). It’s a convenient option if you need liquidity but do not want to sell your investments.
Key Aspects of Loan Against Mutual Funds and Shares:
1. Loan Against Mutual Funds:
Eligible Mutual Funds: Most mutual funds, particularly equity and debt funds, are eligible for securing a loan. However, the maximum loan amount and terms may vary based on the type of mutual fund and the lending institution’s policies.
Loan-to-Value (LTV) Ratio: The loan amount is typically a percentage of the current market value of the mutual fund units. For mutual funds, LTV is usually 50-70%. For example, if your mutual fund is worth ₹10,00,000, you can borrow up to ₹5,00,000 to ₹7,00,000.
Benefits: Since mutual funds are relatively stable compared to individual stocks, the risk for the lender is lower, and the terms are often favourable.
Repayment: The loan can be repaid either through EMIs or as a lump sum at the end of the term, depending on the agreement with the lender.
2. Loan Against Shares (Stocks):
Eligible Shares: Publicly traded shares on major stock exchanges (NSE, BSE) are typically eligible for collateral. Some lenders may have specific guidelines about which stocks they accept (such as blue-chip stocks or stocks with high liquidity).
Loan-to-Value (LTV) Ratio: LTV for shares can vary based on the volatility and liquidity of the stock. Typically, LTV ranges from 50-60%, but it could be higher or lower depending on the lender’s risk appetite.
Example: If your stocks are worth ₹5,00,000, you can get a loan of ₹2,50,000 to ₹3,00,000.
Repayment: Similar to mutual funds, the repayment could be in EMIs or in a lump sum. The loan tenure can range from 6 months to 3 years.
Benefits of Loans Against Mutual Funds and Shares:
Quick Access to Funds: Since the loan is secured by your assets, the approval process is faster compared to unsecured loans.
Lower Interest Rates: As the loan is secured by your investments, interest rates tend to be lower than unsecured loans (usually around 8-15% annually).
No Need to Liquidate Investments: You can continue to hold and benefit from the appreciation or dividends of your investments (such as mutual fund units or shares) while accessing funds.
Flexibility: You can use the loan for any purpose—personal needs, emergencies, business expansion, etc.
Preserve Portfolio Growth: By pledging your investments instead of selling them, you allow your mutual funds and shares to continue growing (subject to market conditions).
Unlock the potential of your investments with our Loan Against Securities and meet your financial needs without selling your valuable assets. Whether it’s for personal use, business growth, or any other purpose, this loan allows you to leverage your securities, such as shares, mutual funds, or bonds, to access funds quickly and conveniently.
Enjoy competitive interest rates, flexible repayment options, and a simple documentation process. Retain ownership of your investments while meeting your financial requirements.
Call us today to apply for a Loan Against Securities, and let our experienced executives guide you through the hassle-free application process.
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