ap7am logo

How to avail loans through mutual funds

Fri, Nov 10, 2017, 11:22 AM
Related Image


Availing loans was a painful affair in earlier times. Guarantors, sureties etc, were necessary. You would have to run from pillar to post for the loan. Now there are many means and ways to avail loans. One among them is on mutual funds. If you have invested in mutual funds, there is no need for selling and you can avail loans on them.

The number of those investing in mutual funds for long term gains and attaining of goals, is increasing. Also, there are those who withdraw these investments, during emergency situations. This will dissolve the goals or aims for which the mutual funds were started in the first place. Without causing breaks in the achievement of your dreams, you can take loans through mutual funds. There will not be any hurdles to the capital investments. No need to stop the investments through SIP.

Loans through pawning
representational imageA majority need loans for three months or for a year. In such cases, you can avail loans by pawning your mutual fund units with banks. Or you can approach a Non-Banking Finance Company (NBFC). You can avail loans on mutual funds, as an overdraft, for small needs. The interest rate depends on the amount offered as loan. Usually it is between 10 to 11 per cent. At least 60 per cent of the mutual funds investments can be availed as loan. The rights over the pawned mutual fund units is transferred to the lending authority. So until the loan amount is cleared there is no chance of transferring or selling the mutual fund units. It is advisable to take loans on equity funds, rather than on debt funds.

Where to avail
Online agencies also offer loans. If the mutual fund units are in demat form, you should obtain permission to pawn them. If they are in physical form, an agreement has to be made beforehand with the lending authorities. These will confer with CAMS or Karvy organisation, where the mutual funds are registered. It will inform that the mutual fund units with a particular folio number are pawned and they should kept in 'lean.' A letter will be sent to the investor or the lending authority to this effect.

When the loan is cleared
representational imageWhen the loan is cleared, the lending authority will itself seek the registrar to release the mutual fund units from its purview. Sometimes, a part of the mutual fund units are released, as soon as some portion of the loan amount is cleared.

On failure to clear the loan
Banks or NBFC agencies will take over the mutual fund units, in case the loan is not cleared. It will notify for redeeming them. Then the fund house will sell the units and send a cheque to the lending authority.
X

Feedback Form

I agree to Terms of Service & Privacy Policy
 
SB : Did Modi really deal with France for Rafale?..
SB : Did Modi really deal with France for Rafale?
Polavaram Caved Mandals Merged with AP..
Polavaram Caved Mandals Merged with AP
Can't fight with an Old Man: CI response to JC Challenge..
Can't fight with an Old Man: CI response to JC Challenge
Purandeswari role confirmed for NTR biopic?..
Purandeswari role confirmed for NTR biopic?
RK Comment: KCR wants to make KTR Next CM..
RK Comment: KCR wants to make KTR Next CM
Small Man occupying Big Office: Pak Imran on PM Modi..
Small Man occupying Big Office: Pak Imran on PM Modi
MP JC 'BEEEEP' Comments on TDP MLAs & MPs..
MP JC 'BEEEEP' Comments on TDP MLAs & MPs
Actor Tanishq Reddy Reveals Kaushal Original Character..
Actor Tanishq Reddy Reveals Kaushal Original Character
Harish Rao Responds on Quitting Politics Rumour..
Harish Rao Responds on Quitting Politics Rumour
Prof. Nageswar on Rafael scam; Modi appeased Anil Ambani..
Prof. Nageswar on Rafael scam; Modi appeased Anil Ambani
Lover-couple living in the forest to escape from village h..
Lover-couple living in the forest to escape from village heads
Home Minister Chinarajappa Responds on JC's Comments..
Home Minister Chinarajappa Responds on JC's Comments
Venkatesh’s Daughter Ashritha Getting Love Marriage!..
Venkatesh’s Daughter Ashritha Getting Love Marriage!
BJP's D Aravind launches 'Pungi Bajao' programme at KCR..
BJP's D Aravind launches 'Pungi Bajao' programme at KCR
Hero Sivaji speech at Rajyanga Parirakshana Maha Rally in ..
Hero Sivaji speech at Rajyanga Parirakshana Maha Rally in Guntur
Trump Administration to Revoke Work Permits to H4 Visa Hol..
Trump Administration to Revoke Work Permits to H4 Visa Holders
Isha Ambani, Anand Piramal’s engagement bash kicks off in ..
Isha Ambani, Anand Piramal’s engagement bash kicks off in Italy
Charan Raj reveals Pawan Kalyan directed Gudumba Shankar!..
Charan Raj reveals Pawan Kalyan directed Gudumba Shankar!
Huge Robbery in Yeshwantpur Express..
Huge Robbery in Yeshwantpur Express
Temple built for CM KCR at Nalgonda..
Temple built for CM KCR at Nalgonda