Eligibility and Documents Required for Loan Against Mutual Funds (LAMF)
Applying for a loan can be one of the most challenging banking procedures in India. However, with the advent of online banking and digitisation, the process of applying for a loan against securities has become more convenient for customers. A Loan Against Security (LAS) primarily includes loans against equity shares, mutual funds, listed bonds, etc. At smallcase, we strive to make investing accessible and seamless. With that in mind, we’re introducing our offering: Digital Loan Against Mutual Funds (LAMF). This secured loan requires you to pledge your mutual fund holdings.
In this blog, we will discuss the eligibility criteria and the required documents for applying for a loan against mutual funds.
What is a Loan Against Mutual Funds?
LAMF stands for Loan Against Mutual Funds. It is a beneficial financial option for individuals who want to leverage their mutual fund units to raise capital quickly without compromising their long-term investment strategies. With LAMF, you can easily use your Mutual Funds (MFs) as collateral at a competitive interest rate of 10.75% per annum at smallcase. To learn more about its features and benefits, read our article on ‘LAMF Benefits and Features’ to get some valuable insights.
How to Get a Loan Against Mutual Funds via smallcase?
If you’re willing to apply for a loan against mutual funds, it is important to choose the right lender. The right lender may offer lower interest rates, flexible repayment options, quick access to funds, and other benefits. One such is smallcase.
Here is a step-by-step guide you can follow to avail a loan against mutual funds via smallcase:
1. Visit the smallcase app and log in with your credentials.
2. Go to the ‘More’ section of the smallcase app and click ‘Loan Against Mutual Funds’.
3. Tap on the ‘Apply Now’ button to start the application process.
4. Add your Date of Birth (DOB) and PAN Card details to initiate the process.
5. Enter the OTP to fetch your credit limit. Calculating your credit limit on smallcase will not have any impact your CIBIL score.
6. Enter and check the loan amount after checking the credit limit.
7. Link your bank account.
8. Select the eligible funds you want to pledge. However, remember that once mutual fund units are pledged, they cannot be sold once the loan is closed.
9. At last, sign the digital agreement for your loan. After verification, the money will be credited to your bank account in 2 working hours.
Loan Against Mutual Funds Eligibility & Documents
To avail an instant loan against mutual funds, knowing the eligibility criteria and required documents is important to ensure a smooth application process. Therefore, we have listed the requirements for opting for a loan against mutual funds at smallcase for you.
Eligibility for Loan Against Mutual Funds
Here is a list of eligibility requirements that one must meet to secure a loan against MF:
- There are no restrictions on the profession and nature of the business, meaning you should be self-employed or a salaried individual for pledging your equity and debt funds.
- You should be an Indian resident.
- In terms of age, you need to be between 18 and 70 years old and have an active PAN Card linked to your bank account.
- One can easily apply for loans up to Rs. 5 cr. against approved mutual funds held with CAMS & KFintech.
Documents Required for Loan Against Mutual Funds
The documents required to apply for a loan against mutual funds in India largely depend on the selected lender. At smallcase, the application process is completely digital and paperless. All you need is your PAN Card if you’re investing in smallcase for the first time. Apart from this, you just need to enter details like your DOB, phone number, and email address.
Thus, if you opt for a loan against MF on smallcase, you do not need a detailed list of documents. However, some users can be asked to enter their Aadhar number in case of discrepancies.
To Wrap It Up…
To conclude, Loans Against Mutual Funds (LAMF) can be a convenient and efficient way to meet your financial needs without liquidating your investments. The eligibility criteria are fairly simple, as minimal documents are required. So, embrace the simplicity of smallcase by opting for a loan against mutual funds with zero formalities!
Frequently Asked Questions on Loan Against Mutual Funds Eligibility
To opt for a loan against mutual funds, an individual should be between 18 and 70 years old. This age bracket reflects the typical working years of most people, allowing the lender to work with the individual until it is fully repaid. Apart from this, an individual must be an Indian citizen and salaried/ self-employed.
Funds held in a non-demat form are eligible for a loan against mutual funds from the smallcase app or the website. These non-demat form funds are only those held in the Statement of Account (SOA) or physical form. However, you can check the list of eligible funds generated by smallcase here.
To obtain a loan against a mutual fund, you can pledge equity and hybrid mutual funds by approaching a Non-banking Financial Institution (NBFI). However, at smallcase, you can pledge funds from 6000+ available schemes like equity, debt, and hybrid.
The interest rate on a loan against mutual funds can vary depending on the lender and the chosen loan tenure. However, at smallcase, we are proud to offer a highly competitive interest rate of 10.75% per annum. This rate is lower than you typically find with traditional loan options, such as personal loans, credit cards, and auto loans. Additionally, the default loan tenure at smallcase is set at 36 months, providing you with ample time to repay the borrowed amount.
Opting for a loan against mutual funds can be better than opting for personal loans and credit cards. This is because you can access funds without liquidating your investments. With lower interest rates than traditional options, LAMF can be considered a cost-effective solution where you can also retain your ownership and continue to benefit from its potential growth. However, doing your own research and/or consulting a financial advisor before investing is advisable.
All About Loan Against Securities & Loan Against Mutual Funds on smallcase –
smallcase offers quick and easy disbursement of loans against securities ( LAMF), all about eligibility, documents, features and benefits of Loan against mutual funds and the process for applying for loan is just one click away –
