One of the biggest advantages on investing in a fixed asset such as mutual fund is diversification of risks. This risk is much lower than investment in stocks. Besides, investors can obtain a loan against this investment to cater to several of their financial needs.
As of now, you may avail loan against folios with a single holding. However, soon other holding pattern folios will be available too. Depending on the customer's relationship with the lender loan seekers can obtain substantial loan amount at an affordable interest rate and flexible repayment tenure. While the loan can be obtained with minimal fees and other financial charges.
When is the best time to take a loan against mutual fund?
The best circumstance to avail a loan on mutual funds is when their equity market drops and you stand a chance to lose up to 20-25% of your corpus and you are in urgent needs of funds. Instead of having to sell the funds it is best to get a loan against them. This will help you to retain the units which are in loss and help the funds to grow back. Moreover, the loan can be used to cater to other financial needs, as well.
Besides, today leading lenders such as NBFCs and financial institutions let you easily apply for the loan online. This is a hassle free process which does not require a lot of paperwork or your time and effort. To help you go through the process and understand it well before taking any decision you can take the guidance from the Relationship Manager of your lender.