Loan Against Mutual Funds in 2025: What It Is, How It Works & Is It Worth It?

📌 Introduction

Imagine needing urgent money — but you don’t want to sell your mutual fund investments and miss out on future returns. Well, good news! You can now get a Loan Against Mutual Funds (LAMF), where your mutual fund units act as security, and you receive a quick loan without selling your holdings.

In this post, we’ll explain what it is, how it works in 2025, the pros and cons, whether it makes sense for you — and how RerassWealth can help you apply for it easily.

📌 What is a Loan Against Mutual Funds?

A Loan Against Mutual Funds is a type of secured loan where you pledge your mutual fund investments as collateral to borrow money from a bank, NBFC, or financial institution. Unlike selling your funds in a hurry, this option helps you raise money while your investments continue to grow.

• ✅ No need to redeem your funds
• ✅ Continue earning returns
• ✅ Quick, lower-interest loans

At RerassWealth, we help clients easily access loan options against their mutual funds through trusted, secure, and fast online channels.

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📌 How Does It Work?

• You pledge your mutual fund units (equity or debt schemes) as security.
• The lender marks a lien on those units.
• Based on the market value of your funds, you get 60–80% of the value as a loan.
• Quick Approval & Same-Day Disbursement: Most applications are approved within 24 hours, and the loan amount is credited to your account on the same day.
• Interest is charged on the used amount.
• Once repaid, the lien is removed, and your investments are free again.

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📌 Example: Loan Against Mutual Funds Calculation for ₹1,00,000

Let’s assume you have mutual fund units worth ₹1,00,000. Here’s a clear calculation of how much loan you can get and what you’d pay with a 10.50% annual interest rate calculated for 365 days.

Particulars	Details
Market Value of Funds	₹1,00,000
Loan-to-Value (LTV) Ratio	75%
Loan Amount Sanctioned	₹75,000
Interest Rate (example)	10.50% per annum
Loan Tenure	Up to 3 years (renewable)

Interest Calculation (Simple Interest)

Interest = (Loan Amount × Rate × Number of Days) / (100 × 365)
= (75,000 × 10.50 × 365) / (100 × 365) = ₹7,875

Total Repayment After 365 Days: ₹75,000 (Principal) + ₹7,875 (Interest) = ₹82,875

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📌 Pros of Loan Against Mutual Funds

• ✅ Lower Interest Rates: 8%–12% p.a., cheaper than personal loans
• ✅ No Fund Redemption: Your investments stay intact
• ✅ Quick Processing & Same-Day Disbursement
• ✅ Processing Fee as low as ₹499 + GST
• ✅ Continue to Earn Returns: Dividends and NAV appreciation continue
• ✅ Zero Prepayment Charges

📌 Cons & Risks

• ❌ Market Risk: If NAV falls, your eligible loan limit drops
• ❌ Lien on Funds: You can’t redeem or switch these investments till repayment
• ❌ Default Risk: Non-payment may lead to fund sale by lender
• ❌ Limited Loan Amount: Usually up to 80% of current value

📌 Loan Against Mutual Funds vs Other Loans — Quick Comparison

Feature	Loan Against Mutual Funds	Personal Loan	Car Loan
Interest Rate (Approx.)	8% – 12% p.a.	10% – 18% p.a.	8% – 13% p.a.
Security/Collateral	Mutual Fund units pledged	Unsecured (no security)	Car hypothecation
Loan Amount Eligibility	Up to 80% of fund value	Based on income profile	Up to 90% of car value
Processing Time	Within 24 hours	1–3 working days	1–2 working days
Processing Fee	₹499 + GST	₹999 – ₹5,000 + GST	₹2,500 – ₹6,500 + GST
Repayment Tenure	Up to 3 years (renewable)	1 to 5 years	1 to 7 years
Prepayment Charges	Zero	0% – 4%	0% – 5%
Effect on Investment	Funds remain invested	No investment involvement	Car depreciates over time

📌 Is It Worth It in 2025?

✔️ Good for:

• Short to medium-term cash needs
• Avoiding high-interest personal loans
• People who don’t want to disturb long-term investments

❌ Not Ideal for:

• Long-term gaps without repayment plan
• Unplanned or frequent borrowing
• Times when markets are volatile

Verdict: A Loan Against Mutual Funds is a smart, low-cost financial tool for emergencies — but should be used carefully with a repayment plan.

👉 Check eligibility & apply now:
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📞 Contact Me for Loan Against Mutual Funds

Rajesh Roushan
📱 Mobile: 7991147238
📧 Email: rerasswealth@gmail.com