Most Common Queries about Loan Against Mutual Funds
As Loan Against Mutual Funds is our new offering, we understand you may have various questions – from the processing fees to the repayment process. After countless discussions with our customers, we’ve meticulously curated this short list of the most commonly asked questions about Loan Against Mutual Funds (LAMF).
Q.1 How to repay the loan?
You have the flexibility to repay the principal amount, in full or partially, at your convenience before the end of your loan tenure i.e. 36 months. Simply visit the loan servicing dashboard click on the ‘Repay cash’ button, and enter the amount you want to repay.
Q.2 What will my monthly payments look like?
On a monthly basis, you only pay interest at the rate of 10.75% p.a. on the outstanding loan amount. For instance, if you have an outstanding loan of ₹1 lakh, your monthly payment would be (1,00,000) x (10.75/12)/100) = ₹896.
On the 7th day of every month (or in the next 3 working days), only the interest accrued of the previous month is automatically debited from your linked bank account.
Q.3 How long can I take the loan for?
The default tenure of the loan is 36 months. However, you can choose to close the loan early without any foreclosure charges. The loan tenure can also be extended beyond 36 months.
Q.4 How is the credit limit calculated?
The credit limit is calculated by taking a percentage of the current market value of the mutual funds you wish to pledge. This percentage is 45% for equity mutual funds and 75% for debt mutual funds. For example, if you’ve eligible equity mutual funds worth ₹1 lakh, you can borrow up to ₹45,000 against them (45% of ₹1 lakh).
Checking your credit limit does not have any impact on your CIBIL score, however, it is a necessary step in order to determine your loan eligibility. To calculate your credit score, just input your PAN, phone number, and email address linked to your mutual fund holdings.
Q.5 Is my data secure with smallcase?
Yes, your data is completely secure. To know more about our privacy policy, click here.
Q.6 What is the processing fees?
The processing fees is calculated based on your total loan amount.
| Loan Amount | Total Fees |
| Under ₹1 lakh | ₹999 + 18% GST |
| Between ₹1 to ₹5 lakh | 1% of loan amount + 18% GST |
| More than ₹5 lakh | ₹4,999 + 18% GST |
Q.7 What happens when I pledge my mutual funds?
The mutual funds are lien marked in the favour of the lender i.e. that they are kept as collateral with the lender. Remember that your mutual funds will be pledged after availing a loan, so you can’t sell/redeem such pledged mutual funds until the closure of the loan.
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(30 Jan 2023)
