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Risks to Consider Before Taking Loan Against Mutual Funds
Market volatility, margin calls, and over leveraging are key risks to evaluate before opting for LAMF.
Although Loan Against Mutual Funds provides flexible liquidity, market volatility can significantly reduce the value of pledged units. If collateral value falls below required thresholds, lenders may issue a margin call demanding partial repayment or additional units. Ignoring such alerts can result in forced redemption. Borrowers should avoid excessive leverage, maintain repayment discipline, and regularly monitor portfolio performance to ensure responsible borrowing decisions. Apply Now