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Loan Against Mutual Funds
Financial emergencies can often push you to break your investments. These could arise from medical needs, home repairs, or other short-term requirements. However, if you hold mutual funds, there’s a smarter alternative — a Loan Against Mutual Funds (LAMF). This allows you to borrow money by pledging your mutual fund units, without redeeming them. Your investments stay intact and continue to grow while you take care of your urgent financial needs.
Investment Plans
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Guaranteed Tax Savings
Under sec 80C & 10(10D) -
₹1 Crore
Invest ₹10k per month* -
Zero LTCG Tax
Top performing plans˜ with High Returns**
Invest ₹10K/month & Get ₹1 Crore returns*
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Mutual Fund
- Loan Against Mutual Funds
Best SIP Funds
Payment Mode
Invest
₹ 10,000
Invest for
Instant tax receipt
Large Cap Equity Fund
AUM (Cr)
₹2,780
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.95 %
Instant tax receipt
Instant tax receipt
Accelerator Mid-Cap Fund II
AUM (Cr)
₹5,888
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.68 %
Instant tax receipt
Opportunities Fund
AUM (Cr)
₹38,561
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 23.26 %
Instant tax receipt
Diversified Equity Fund
AUM (Cr)
₹3,683
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 18.12 %
Instant tax receipt
Frontline Equity Fund
AUM (Cr)
₹4,489
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.09 %
Instant tax receipt
Grow Money Plus Fund
AUM (Cr)
₹454
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 17.91 %
Instant tax receipt
Instant tax receipt
Instant tax receipt
Large Cap Equity Fund
AUM (Cr)
₹2,780
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.95 %
Diversified Equity Fund
AUM (Cr)
₹3,683
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 18.12 %
Frontline Equity Fund
AUM (Cr)
₹4,489
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.09 %
Grow Money Plus Fund
AUM (Cr)
₹454
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 17.91 %
Growth Super Fund
AUM (Cr)
₹13,662
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 17.5 %
Accelerator Mid-Cap Fund II
AUM (Cr)
₹5,888
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.68 %
Opportunities Fund
AUM (Cr)
₹38,561
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 23.26 %
Growth Opportunities Plus Fund
AUM (Cr)
₹1,025
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.46 %
Classic Opportunities Fund
AUM (Cr)
₹13,991
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 19.17 %
Opportunities Fund
AUM (Cr)
₹3,493
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.52 %
Whole Life Income Fund
AUM (Cr)
₹849
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 6.07 %
Individual Preserver Pension Fund
AUM (Cr)
₹140
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 5.53 %
Whole Life Aggressive Growth Fund
AUM (Cr)
₹912
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.62 %
Save N Grow Money Fund
AUM (Cr)
₹65
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 10.84 %
Asset Allocation Fund II
AUM (Cr)
₹297
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 12.45 %
Multi Cap Balanced Fund
AUM (Cr)
₹2,027
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 13.01 %
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What is a Loan Against Mutual Funds?
A Loan Against Mutual Funds is a type of secured loan where you pledge your mutual fund holdings as collateral to access a credit line or overdraft facility from a bank or a Non-Banking Financial Company (NBFC). This allows you to meet short-term financial needs without having to sell your mutual funds. You only pay interest on the amount you actually use, not on the entire sanctioned limit, making it a cost-effective borrowing option. Meanwhile, your mutual fund units remain invested, giving you the opportunity to continue benefiting from potential market growth.
Features of Loan Against Mutual Funds
The key features to help you decide if LAMF is the right borrowing option for your needs or not are:
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Loan Amount: You can borrow up to 50–70% of the value of your equity mutual funds. For debt mutual funds, the loan amount can go up to 80–90% of their current market value.
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Interest Rate: Generally ranges between 9% to 14% per annum, depending on the lender and fund type.
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Loan Tenure: Flexible – from a few months to a few years, depending on your needs and the lender’s terms.
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Disbursal Time: Usually within 1–2 business days for eligible customers, especially with online applications.
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Minimum Loan: As low as ₹50,000, based on lender policies.
Note: If you are investing through SIPs, your ongoing SIPs can continue even while your mutual fund units are pledged, depending on the terms of the lien and the lender’s policy.
- Insurance Companies
- Mutual Funds
| Returns | ||||
|---|---|---|---|---|
| Fund Name | 5 Years | 7 Years | 10 Years | |
| High Growth Fund Axis Max Life | 32.5% | 21.1% |
18.6%
View Plan
|
|
| Top 200 Fund Tata AIA Life | 30.5% | 21% |
18.2%
View Plan
|
|
| Accelerator Mid-Cap Fund II Bajaj Allianz | 21.68% | 12.49% |
13.62%
View Plan
|
|
| Opportunities Fund HDFC Life | 23.26% | 14.56% |
13.62%
View Plan
|
|
| Equity II Fund Canara HSBC Life | 17.12% | 9.88% |
9.64%
View Plan
|
|
| Growth Opportunities Plus Fund Bharti AXA | 20.46% | 14.44% |
13.67%
View Plan
|
|
| Multiplier Birla Sun Life | 23.49% | 14.17% |
14.55%
View Plan
|
|
| Equity Large Cap Fund Edelwiess Life | 16.79% | 10.5% |
9.71%
View Plan
|
|
| Opportunities Fund ICICI Prudential Life | 20.52% | 13.06% |
11.74%
View Plan
|
|
| Balanced Fund LIC India | 10.71% | - |
-
View Plan
|
|
Fund rating powered by
Last updated:
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| Returns | ||||
|---|---|---|---|---|
| Fund Name | 3 Years | 5 Years | 10 Years | |
| Active Fund QUANT | 23.92% | 31.48% |
21.87%
|
|
| Flexi Cap Fund PARAG PARIKH | 20.69% | 26.41% |
19.28%
|
|
| Large and Mid-Cap Fund EDELWEISS | 22.34% | 24.29% |
17.94%
|
|
| Equity Opportunities Fund KOTAK | 24.64% | 25.01% |
19.45%
|
|
| Large and Midcap Fund MIRAE ASSET | 19.74% | 24.32% |
22.50%
|
|
| Flexi Cap Fund PGIM INDIA | 14.75% | 23.39% |
-
|
|
| Flexi Cap Fund DSP | 18.41% | 22.33% |
16.91%
|
|
| Emerging Equities Fund CANARA ROBECO | 20.05% | 21.80% |
15.92%
|
|
| Focused fund SUNDARAM | 18.27% | 18.22% |
16.55%
|
|
Last updated: June 2025
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Eligibility Criteria for Loan Against Mutual Funds
The general eligibility criteria of a loan against Mutual Funds are:
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Must hold mutual funds in your name (individual capacity; usually not joint accounts).
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Funds must be registered with a recognised transfer agent (e.g., CAMS or KFintech).
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You need an active bank account and internet banking access with the lending bank.
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Some banks may offer this service only to their existing customers.
How to Apply for a Loan Against Mutual Funds?
Applying for a Loan Against Mutual Funds is typically a simple and digital process. The basic steps involved in applying are:
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Choose a Lender: Banks, Non-Banking Financial Companies (NBFCs), or fintech platforms offering LAMF services.
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Check Eligibility: Confirm if your mutual fund schemes are accepted by the lender.
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Apply Online or Offline: Through internet banking, mobile apps, or by visiting a branch.
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Pledge Your Funds: Authorise the lender to mark a lien on your mutual fund units.
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Get Access: Once the lien is marked, funds are disbursed or an overdraft account is set up.
Benefits of Taking a Loan Against Mutual Funds
A Loan Against Mutual Funds offers a practical way to access funds without disrupting your long-term investment plans. Some of the key advantages of loan against Mutual Funds are:
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Continue Staying Invested: You don’t need to liquidate your mutual fund units, allowing your investments to stay intact and potentially grow over time.
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Quick Access to Funds: Funds are usually disbursed quickly, making this option ideal for emergencies or short-term financial needs.
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Lower Interest Rates: As it's a secured loan backed by your mutual fund holdings, the interest rates are typically lower than those for unsecured loans like personal loans or credit cards.
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Flexible Repayment: Many lenders offer overdraft-style repayment, where you pay interest only on the amount used, without fixed monthly EMIs.
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Continued Earnings: Even while your mutual funds are pledged, you may still earn dividends or interest, helping you benefit from market performance.
Points to Consider When Applying for Loan Against Mutual Funds
Before opting for a Loan Against Mutual Funds, it's essential to understand certain key aspects that may affect your investment and borrowing experience.
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Lien on Funds: A lien is placed on the pledged mutual fund units, meaning you cannot redeem or switch these units until the loan is fully repaid. This ensures the lender has legal rights over the collateral during the loan tenure.
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Market Risk: If fund values fall, you may receive a margin call asking you to top up or repay part of the loan.
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Repayment Responsibility: Defaulting can lead to the lender selling your units to recover dues.
Conclusion
A Loan Against Mutual Funds is a useful financial tool when you need funds without disturbing your long-term investments. It offers a balance between liquidity and continued market participation. However, like any loan, it should be used responsibly and with a clear repayment plan in mind.
Before applying, compare lenders, understand the terms carefully, and ensure you’re not compromising your future financial goals.
FAQs
-
What is a Loan Against Mutual Funds?
A Loan Against Mutual Funds lets you borrow money by pledging your mutual fund units, without selling them. -
How much loan can I get against my mutual funds?
You can get up to 50–70% of your equity mutual fund value or 80–90% of your debt fund value. -
Do I have to pay interest on the full amount?
No, with a Loan Against Mutual Funds, you only pay interest on the amount you actually use. -
Can I still earn returns on my mutual funds?
Yes, even when pledged, your mutual funds may continue to earn dividends or interest. -
How quickly can I get the funds?
Funds from a Loan Against Mutual Funds are usually disbursed within 1–2 business days if you're eligible.
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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