Archive · 18 Jun 2025
Loans Against Mutual Funds: A Guide for Investors
Imagine you need money but don't want to sell your investments.
A Loan Against Mutual Funds (LAMF) lets you borrow using your mutual funds as collateral.
You get the money quickly, and pay interest only on what you use.
Your investments stay invested, potentially growing.
You can use it for unexpected costs like medical bills or education.
If the market goes down, you might need to pay extra, and you can't sell the funds until you repay the loan.
Loans Against Mutual Funds (LAMF) allow investors to borrow money using their mutual fund holdings as collateral.
LAMFs offer quick disbursal, often within 24 hours, with minimal documentation required.
Interest is charged only on the utilized amount, and investors' investments remain intact.
LAMFs can be used for various needs, including medical emergencies and education fees.
Demand for LAMFs in India has recently increased.
- Who
- Investors needing funds.
- What
- A secured loan where investors pledge their mutual fund units as collateral to borrow money.
- When
- Demand surged in early 2025.
- Where
- India
- Why
- To access funds without selling investments.
Borrower's Perspective
Lender's Perspective
Risk vs. Reward
Borrower's Perspective
LAMFs provide access to funds without selling investments.
Lender's Perspective
LAMFs come with the risk of margin calls and potential liquidation.
- What is LAMF?
- A secured loan using mutual funds as collateral
- Disbursal Time
- Within 24 hours
- Loan-to-Value (LTV) Ratio (smallcase)
- Up to 45% for equity, 75% for debt
- Use Cases
- Medical emergencies, education fees, business capital
- Key Feature
- Interest only on utilized amount