Loan against security is an overdraft facility which is pledged against investments like mutual funds, shares, bonds, life insurance policies. While taking a loan against securities, the loan amount is transferred into the bank account and the borrower can draw money from the account as needed.
The key advantage of loan against securities is that interest is paid on the consumed amount only and not the entire amount approved. Eligibility criteria depend on the value of the security that is offered as collateral. However, one can borrow up to 10 crores at an affordable interest rate.
Apply for a loan against securities is easy and the procedure to apply include:
1: Open a current account with a Bank with an overdraft facility to avail loan against security.
2: Visit your lender's website and fill the application form.
3: Post this, most banks send a confirmation message that helps keep a track loan status
4: Submit the required documentation such as ID proof, address proof, document proof of securities as mandated by the bank
5: Receive the desired amount of loan after the verification process.
No joint account is required to avail loan against securities.
The key eligibility criteria for the loan against security include:
- The borrower must be an Indian citizen
- The borrower must have a regular source of income
- The borrower must fall in the age bracket of 21-65 years
Other bank-specific criteria exist and it is advisable to discuss with your select bank for more details.