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What is a Loan Against Mutual Funds? Quick Guide
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Borrow against mutual fund units without redeeming them; typical LTV 50–80% and rates 9–12% p.
A Loan Against Mutual Funds (LAMF) lets you borrow by pledging mutual fund units as collateral. Unlike redemption, units remain invested and continue compounding while you access liquidity. Banks and NBFCs typically lend 50–80% of current NAV. Interest rates generally range 9–12% per annum, often below personal loans. Approvals can be rapid—instant to 24 hours—via demat or lien marking. Because units aren’t sold, you defer capital gains tax. Suitable for short-term cash needs, working capital, or strategic leverage and contingencies.