Loan Against Property
A loan against mutual funds allows you to raise money against eligible mutual fund units without selling your investments. Instead of redeeming the units, you pledge eligible holdings and a lien is created in favour of the lending partner. You continue to own the investments, while the lender provides credit based on the eligible value and applicable LTV. Through SwipeLoan, you can explore loan against mutual funds options from ₹50,000 to ₹5 crore across 100+ RBI-registered lenders. SwipeLoan is a marketplace, not a lender, and the lending partner decides the final loan amount, interest rate, fees and approval.
Keep your investments
Pledging eligible units allows you to access funds without redeeming them.
Compare 100+ lenders
Explore loan options across SwipeLoan's RBI-registered lending-partner network.
₹50,000 to ₹5 crore
The available range depends on the lending partner, eligible holdings and LTV.
Overdraft options
Some lenders allow you to draw only what you need and pay interest on the amount used.
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What Is a Loan Against Mutual Funds?
A loan against mutual funds (LAMF) is a secured loan where eligible mutual fund units are used as collateral.
You don’t sell the units. Instead, the lender marks a lien on the eligible units. This restricts redemption of those pledged units while the loan remains outstanding.
The important difference is:
You borrow against the investment instead of selling the investment.
Why do people choose LAMF?
A loan against mutual funds can be useful when you need temporary liquidity but do not want to sell investments.
Selling mutual fund units can mean:
- losing exposure to the investment
- potentially realising a capital gain or loss
- possible exit-load implications
- losing future exposure to market performance
By pledging eligible units instead, you can access funds while retaining ownership.
However, this does not remove investment risk.
If the NAV falls, the value of your collateral falls too.
How Much Can You Borrow Against Your Mutual Funds? (LTV)
The amount you can borrow depends on the value of your eligible mutual fund holdings and the loan-to-value (LTV) applied by the lending partner.
LTV (%) = Loan Amount ÷ Eligible Mutual Fund Value × 100
Different types of mutual funds can have different LTVs.
| Fund type | General LTV tendency | Why |
|---|---|---|
| Debt mutual funds | May support a higher LTV | Generally lower volatility |
| Equity mutual funds | Usually lower | Higher market volatility |
| Hybrid funds | Depends on composition | Risk varies with equity exposure |
Example: ₹40 lakh mutual fund portfolio
| Example LTV | Potential loan |
|---|---|
| 50% | ₹20,00,000 |
| 60% | ₹24,00,000 |
| 70% | ₹28,00,000 |
| 75% | ₹30,00,000 |
These numbers are illustrations only.
Your actual loan against mutual funds amount depends on the lender’s approved scheme list, valuation method, LTV and other eligibility conditions.
Things to remember about LTV
Not every mutual fund is eligible.
A lender may only accept units from its approved list.
Different lenders can use different LTVs.
The same portfolio may support different loan amounts with different lenders.
The value can change every market day.
Your approved borrowing capacity is linked to collateral value, so a fall in NAV can affect your available drawing power.
The lender's rules matter.
Do not assume that an LTV advertised by one lender applies across the entire market.
What Happens If the Value of Your Mutual Funds Falls?
This is one of the most important things to understand before taking a loan against mutual funds.
Your loan balance does not automatically fall when the mutual fund NAV falls.
Example
Suppose you:
- Pledge mutual funds worth ₹40 lakh
- Borrow ₹20 lakh
- Start at 50% LTV
If the portfolio falls by 20%, its value becomes:
₹40 lakh → ₹32 lakh
Your loan is still:
₹20 lakh
Your effective LTV becomes:
₹20 lakh ÷ ₹32 lakh = 62.5%
Depending on the lending partner’s rules, this could trigger a margin call or other action.
What could the lender ask you to do?
Depending on your agreement, you may need to:
- pledge additional eligible units
- partially repay the loan
- bring the LTV back within the required level
- take other action specified by the lender
If you do not respond within the applicable period, the lender may have rights under the agreement to sell or redeem pledged units.
How can you reduce this risk?
The safest approach is not to borrow at the maximum possible LTV simply because it is available.
For example, if the lender allows a 50% LTV, borrowing substantially below that level leaves more room for market fluctuations.
This is particularly important for volatile equity funds.
A loan against mutual funds reduces the need to sell your investments today, but it does not remove market risk.
Loan Against Mutual Funds Without Selling Your Investments
One of the biggest reasons borrowers consider LAMF is simple:
They need money, but they don’t want to sell their investments.
With an eligible loan against mutual funds:
- Your eligible units are identified.
- A lien is marked on the required units.
- The lending partner provides the agreed credit facility.
- You continue to own the pledged units.
- You repay the loan according to the agreed terms.
- After repayment, the lender releases the lien.
Why not simply redeem the units?
Selling may create a taxable capital gain depending on the fund type and your circumstances.
It also permanently reduces your investment holding.
With a loan, you retain the investment but take on an interest cost and repayment obligation.
That means neither option is automatically better.
The right choice depends on:
loan duration + interest cost + tax impact + expected investment needs + market risk
Which Mutual Funds Can Be Pledged?
Not every mutual fund scheme is accepted by every lender.
Lenders may maintain approved lists based on factors such as:
- mutual fund category
- scheme size
- liquidity
- market volatility
- fund house
- scheme track record
- regulatory criteria
- lender risk policy
Common categories
Equity Mutual Funds
Equity funds may be accepted, but the LTV can be lower because the NAV can fluctuate more sharply.
Debt Mutual Funds
Debt funds may qualify for higher LTV in some products because they are generally less volatile than equity funds.
Hybrid Funds
Eligibility and LTV can depend on the level of equity exposure and the lender's rules.
Liquid Funds
Some lenders may accept eligible liquid funds under their approved list.
ELSS
ELSS has a lock-in period, so lenders may apply special restrictions.
Approved Mutual Fund Schemes for Loan
Why comparing lenders matters
An approved mutual fund list can differ between lenders. That means the same investor may receive different borrowing capacity from different lending partners.
Loan Against Equity Mutual Funds
Equity mutual funds can be used as collateral with lenders that accept the relevant schemes.
However, the LTV is often lower than for less volatile categories.
Why?
Because the lender has to account for market fluctuations.
Example
If your eligible equity mutual fund holding is worth ₹20 lakh and the lender applies an illustrative 50% LTV:
Potential borrowing = ₹10 lakh
This is only an example. The actual LTV and eligible value depend on the lender and specific scheme.
Loan Against Debt Mutual Funds
Debt mutual funds may qualify for a higher LTV with some lenders because their NAVs can be less volatile than equity funds.
For example:
A ₹20 lakh eligible debt-fund portfolio at an illustrative 75% LTV could support:
₹15 lakh
Again, this is an example rather than an assured loan amount.
Always check the lender’s current LTV rules.
Loan Against Mutual Funds Eligibility
LAMF eligibility depends on both the borrower and the mutual fund holdings.
Borrower-side factors
| Factor | What may be checked |
|---|---|
| Age | Lender's minimum and maximum age criteria |
| KYC | PAN, identity and address details |
| Residency | Resident/NRI eligibility varies by lender |
| Account ownership | Whether the borrower owns the eligible units |
| Credit history | May still be considered |
| Bank account | Required for disbursal and repayment |
Investment-side factors
| Factor | What may be checked |
|---|---|
| Scheme eligibility | Must be on the lender's approved list |
| Fund value | Sufficient eligible collateral |
| Holding structure | Sole/joint holder requirements |
| Existing lien | Already pledged units generally cannot be pledged again |
| RTA/depository | Lien must be operationally possible |
| Lock-in | Restrictions such as ELSS lock-in may apply |
Unlike a typical unsecured personal loan, the value and type of your investments play a major role in LAMF eligibility.
Documents Required for a Loan Against Mutual Funds
LAMF generally requires fewer physical documents than a property-backed loan because the collateral can be verified digitally.
Common requirements may include:
- PAN
- Aadhaar or accepted KYC document
- Address proof
- Bank account details
- Mutual fund holding statement/CAS where applicable
- Demat statement where relevant
- Lien/pledge authorisation
- Joint-holder consent where required
The exact list depends on the lending partner.
One advantage of digital LAMF
Unlike a loan against property, you generally do not need: property title deeds building plans property valuation encumbrance certificates physical property inspection This can make a loan against mutual funds considerably simpler to process.
Loan Against Mutual Funds Interest Rate
The loan against mutual funds interest rate is determined by the lending partner.
There is no single interest rate that applies to every LAMF borrower.
The lender may consider:
- fund category
- LTV
- loan amount
- repayment structure
- borrower profile
- credit history
- term loan versus overdraft
- lender’s pricing policy
Loan Against Mutual Funds EMI Calculator
For a term loan, the EMI is generally based on:
- loan amount
- interest rate
- repayment tenure
EMI = [P × R × (1 + R)^N] ÷ [(1 + R)^N − 1]
Where:
- P = principal
- R = monthly interest rate
- N = number of months
Example: ₹10 lakh loan
At an illustrative 11% annual interest rate:
Personal Loan EMI Calculator
Calculate your monthly loan payment
Your Monthly EMI Payment
₹16,134
| Tenure | Approximate EMI |
|---|---|
| 12 months | ₹88,382 |
| 24 months | ₹46,608 |
Overdraft Against Mutual Funds
Some lenders structure a loan against mutual funds as an overdraft or credit line.
Instead of receiving the full sanctioned amount immediately, you get an approved limit.
Example
Approved limit:
₹10 lakh
Amount actually used:
₹4 lakh
Interest may be charged on the ₹4 lakh used rather than the entire ₹10 lakh, depending on the lender’s structure.
This can be useful when:
- your cash requirement changes over time
- you need short-term funding
- you expect money to come in soon
- you want to keep a credit line available without borrowing the full amount
What should you check?
- interest on drawn amount
- annual renewal charges
- commitment/non-utilisation charges
- drawing-period rules
- repayment conditions
- validity of the credit limit
Pledge and Lien Marking of Mutual Funds
When you take a loan against mutual funds, the lender places a lien or pledge on eligible units.
In simple terms
You remain the owner.
But the pledged units cannot generally be redeemed until the lien is released.
Where is the lien marked?
Depending on how the mutual funds are held, the process may involve:
- a Registrar and Transfer Agent such as CAMS or KFin Technologies
- a depository when units are held in demat form
What happens after repayment?
The lending partner instructs the relevant system to release the lien.
After closure:
- Obtain confirmation that the loan is closed.
- Confirm that the lien has been released.
- Check your mutual fund account/CAS.
- Make sure the units are no longer shown as encumbered.
Do not assume the lien has disappeared just because you have made the final repayment.
What Happens to Your Mutual Fund Units After Pledging?
Pledging does not mean that the lender becomes the owner of your investment.
Generally:
- You continue to own the units.
- The units remain exposed to market movements.
- Eligible dividends/IDCW may continue to be paid according to fund rules.
- You cannot freely redeem lien-marked units.
- Switching may also be restricted until the lien is released.
- New investments may remain unpledged unless they are separately included.
What Happens If Your NAV Falls?
The NAV of your mutual fund can move up or down.
A falling NAV reduces collateral value.
That can increase your effective LTV and potentially trigger action by the lender.
Example
Portfolio value:
₹30 lakh
Loan:
₹15 lakh
Initial LTV:
50%
If the portfolio falls to:
₹24 lakh
the effective LTV becomes:
62.5%
At this point, the lender may require you to restore the required ratio according to the loan agreement.
Possible responses
- Add eligible mutual fund units
- Partially repay
- Reduce the outstanding loan
- Take another action allowed by the lender
Risks of Loan Against Mutual Funds
LAMF can be useful, but it is not risk-free.
Market risk
LAMF can be useful, but it is not risk-free.
Margin risk
A large fall can trigger a margin requirement.
Interest cost
You pay interest even if the mutual fund investment performs poorly.
Redemption restriction
Pledged units cannot generally be freely redeemed while the lien remains.
Forced sale risk
If you fail to meet the lender’s requirements after a margin event, the lender may be able to sell/redeem pledged units according to the agreement.
Over-borrowing risk
An available credit limit is not the same as an affordable borrowing amount.
Loan Against Mutual Funds for Business Use
Some borrowers use investment-backed loans for business cash-flow needs.
Depending on lender policy, funds may be used for:
- working capital
- supplier payments
- short-term cash-flow gaps
- business expansion
- other permitted purposes
However, the loan’s tax treatment and prepayment conditions can depend on the purpose of borrowing and the lender’s terms.
Always check the loan agreement before using the funds for business purposes.
Loan Against Mutual Funds for Emergency Expenses
LAMF can be considered when you already have eligible mutual funds and need temporary liquidity for a permitted expense.
Potential examples include:
- medical expenses
- education payments
- business cash-flow needs
- urgent household expenses
- short-term financial gaps
The lending partner determines whether the requested use is permitted.
How to Apply for a Loan Against Mutual Funds Online via SwipeLoan
LAMF can be considered when you already have eligible mutual funds and need temporary liquidity for a permitted expense.
Potential examples include:
- medical expenses
- education payments
- business cash-flow needs
- urgent household expenses
- short-term financial gaps
The lending partner determines whether the requested use is permitted.
How to Apply for a Loan Against Mutual Funds Online via SwipeLoan
Step 1: Tell us what you need
Enter the loan amount and basic details about your mutual fund holdings.
Step 2: Check available options
SwipeLoan compares your information against the criteria of its lending-partner network.
Step 3: Review lender options
Compare available loan amount, LTV, interest rate, tenure, fees and repayment structure.
Step 4: Select a lending partner
Choose the option that best fits your requirements.
Step 5: Complete the lender's process
The lending partner performs KYC, investment verification and other required checks.
Step 6: Lien marking
Eligible units are pledged/lien-marked in favour of the lending partner.
Step 7: Loan disbursal
If approved, the lending partner disburses the loan according to the agreed terms.
Why compare before applying?
Different lenders can have: different approved fund lists different LTVs different interest rates different fees different loan structures That means the same mutual fund portfolio may lead to different borrowing options depending on the lender.
