Understanding monthly instalments on LAMF in 1 minute
Q: What is the monthly instalment on a ₹1 lakh loan against mutual funds (LAMF)?
In LAMF, borrowers pay only the monthly interest on the loan amount. For a ₹1 lakh loan, the annual interest rate is 10.5%, which results in a monthly interest payment of ₹875. This is lower compared to traditional loans where both interest and principal are paid monthly.
Monthly payments for different loan amounts
| Loan amount | Interest rate | Monthly installment |
| ₹25,000 | 10.5% | ₹218 |
| ₹50,000 | 10.5% | ₹437 |
| ₹75,000 | 10.5% | ₹656 |
| ₹1,00,000 | 10.5% | ₹875 |
Q: Does the monthly payment include the principal amount?
No, the monthly payments cover only the interest. The principal repayment can be done at any time within the 3-year tenure.
Q: Can I make partial principal repayments?
Yes, you have the flexibility to make partial principal repayments during the 3-year period. Each principal repayment reduces the interest obligation. For example, if you have taken a loan against mutual funds for ₹1 lakh in January and you repay ₹50,000 in February, your outstanding principal drops to ₹50,000, and from the next month onward, your monthly interest payment is halved to ~₹437. You can consistently reduce the principal amount at any point, thereby lowering your monthly payments.
Q: Are there prepayment charges?
No, there are no prepayment charges or foreclosure charges for early repayments of the principal amount.
