Want an emergency loan against Mutual Funds

[arjungoyal12]

Where can I get emergency loan against my Mutual Funds investment? and, how as well? I don't have much knowledge about it. Is it really worth it?

 

[i_m_deepankar.advisor]

There are many options to get loans against mutual funds. On equity, you get 50% of that amount and on debt, you get 80% of the loan amount. The percentage I tell you is the average available return. On this loan amount, you have to pay approximately 10% as interest of that. For more details, you also mail me at deepankarworkdesk@gmail.com

 

[PoornaChand]

Where can I get emergency loan against my Mutual Funds investment? and, how as well? I don't have much knowledge about it. Is it really worth it?

You can get from HDFC and ICICI Banks, and recent i saw this feature on Small case app Aswell.
10.5% is the interest rate.

You need to have Mutual Fund units in folio format only. Demat mutual fund units are not allowed for taking loan, this means, if you purchase mutual funds on Zerodha Coin, or Upstox, then you won't get loan.

Is it worth taking?
Probably yes.
1. If your mutual funds are on profit, if you sell them you need to pay taxes unnecessarily.
2. If you go for other loans, you need to pay high interest on the loans.
3. If you are taking loan at 10.5% against Mutual funds, and if your mutual funds are generating 7.5% returns, then effective cost of taking loan 3%.

Consider following math:



By Taking loan you could be paying 45K as interest towards loan, and at same time you could be getting 80K as gains from you mutual fund at 7.5%. (Assuming Debt mutual funds).

I used online loan calculators and Lumpsum calculator for calculation purpose. Actual value may vary.