Low on cash but do not want to sell your mutual funds investments, which are precious? And here is some excellent news there is a way to borrow money on your mutual funds! This intelligent investing idea allows you to get money without derailing your long term investment process. Imagine that you are borrowing the money with your units of mutual fund as a security just as you would borrow with gold or property. Competitive interest rates and faster processing mean you have never been able to get personal loan app approved so easily with mutual funds supporting you.
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How Does This Work?
Taking loan on mutual fund is easy. Your mutual fund units are taken by banks and other financial institutions as a collateral and handed over to you in terms of money depending on their present value. Equity mutual funds have a limit on the overdraft of up to 50 percent of Net Asset Value (NAV). In the case of debt funds this percentage may even be even higher – up to 80-90%. The best part? Your investments continue to increase as you spend the money you borrow on your requirements. It is having your cake and eating it!
What’s the Money Talk Here?
Let’s discuss numbers because that is what is important, right? Interest rates are usually between 8 percent and 15 percent per annum with certain lenders charging interests as low as 10.75 percent. Depending on the policies of the lender, and the size of your portfolio, the loan amount may differ drastically whether it is Rs 10,000 or Rs 5 crores. This option will be cheap to personal loan seekers as opposed to regular unsecured loans. Processing charges are also low- about 0.50 percent of the loan value or a flat fee of only Rs 999 including taxes, by some other lending institutions.
Who Can you start?
The qualification is not too complicated. You must be aged between 21-65 years old, with good credit score (that is mostly more than 650), and you must own mutual fund units which are 6 months old. Your source must be known AMCs and you will require simple KYC documentation. The majority of banks take both equity and debt mutual funds but equity funds are usually granted lower loans to value ratios because of market volatility.
The Speed Factor
This is where the action becomes fun to any individual surfing a personal loan app. The whole process is carried out in a few hours digitally. Other fintech firms guarantee cash within 4 hours and have a fully online, 5-minute application procedure. No time consuming paperwork, no home visits, and no weeks of waiting. All you need to do is upload your documents, choose your mutual fund units and in a jiffy you will see money in your account.
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Conclusion
It is better than selling your investments or getting costly personal loans because its interest rates begin at 8 per cent, its processing fees are very low, and its approval can take only a few seconds using any up-to-date personal loan application. It is only necessary to remember that you should borrow wisely and make sure that you can service the loan comfortably to maintain your financial health intact.
