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Margin calls remain key consideration for loan against mutual funds
Investors are advised to understand margin calls and loan-to-value conditions when using loan against mutual funds as a credit option.
While loan against mutual funds offers liquidity without redemption, investors must understand margin related risks. Loans are extended based on predefined loan to value ratios, which vary by fund type. In periods of market decline, collateral values can fall, potentially prompting margin calls or additional collateral requirements. Financial advisors recommend that investors evaluate these dynamics carefully before availing loans. Apply Now