Loan Against Mutual Funds Calculator
Secured Credit Line Benefits:
- Approved limits: **50%** on Equity mutual funds (₹2,50,000) and **80%** on Debt mutual funds (₹2,40,000).
- Your portfolio units **continue to compound fully** at market growth rates (none of your holdings are sold!).
- You pay zero capital gains taxes or redemption penalties because you are borrowing against the units, not redeeming them.
- Interest is charged **only** on the utilized balance of **₹1,00,000** at a simple rate of **10.5% p.a.** (₹875/month).
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Loan Against Securities Limit Formula
Calculates overdraft lines of credit against mutual fund values, showing interest-only monthly payouts on the utilized cash.
Worked Example: Portfolio value ₹10 Lakhs (Equity: ₹6L, Debt: ₹4L) utilizing ₹1 Lakh at 10.5% rate
Loan Against Mutual Funds: Getting credit without stopping compounding
Rajesh faced a sudden expense of ₹1 Lakh. He had ₹10 Lakhs invested in equity mutual funds compounding at 12% p.a. He didn't want to redeem his units, which would trigger tax liabilities and halt his compound interest engine.
He took a loan against his mutual funds. At a 50% equity LTV limit, his credit line was ₹5 Lakhs. He utilized ₹1 Lakh at 10.5% interest, paying only the interest of ₹875 monthly. His mutual funds remained fully invested and grew by ₹1.2 Lakhs during the year.
Loan Against Mutual Funds (LAMF) provides a liquid overdraft facility against fund units, allowing you to access credit without redeeming your long-term investments.
Use LAMF to meet short-term emergency cash needs. It preserves your long-term wealth assets and avoids capital gains tax on redemptions.
Frequently Asked Questions
How does a Loan Against Mutual Funds work?
You pledge your equity or debt mutual fund units as collateral with a lender. They provide an overdraft line of credit. You pay interest only on the utilized amount, while your units continue to compound.
How much loan can I get against mutual funds?
LTV limits are up to 50% of the market value for equity mutual funds and up to 80% of the value for debt mutual funds.
Do my mutual fund investments stop compounding?
No. Your mutual fund holdings remain fully invested and earn daily compounding returns. The pledge only restricts you from selling the units until the loan is closed.
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