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Understanding margin risk becomes key for investors using LAMF
Experts highlight the importance of understanding margin calls and loan-to-value limits before using loan against mutual funds as a short-term borrowing option.
While loan against mutual funds offers liquidity without redemption, investors are increasingly advised to understand margin-related risks. Loans are sanctioned based on loan to value limits that vary across equity, debt, and hybrid funds. If market values fall sharply, borrowers may be required to top up collateral or partially repay the loan. Awareness of these conditions is essential for responsible usage. Apply Now