Loan Against Mutual Funds: A Step-by-Step Guide to Loan Applications 2024

Taking out a loan against mutual funds or stocks can provide a smart alternative if you need to borrow money and have investments in these areas. Loan against mutual funds (LAMFs) offers an overdraft capacity against the units of your mutual fund, providing flexibility to access and return cash without additional fees. Interest is only charged on the amount used for the funds' duration. 

This detailed blog has already discussed every aspect of loans against mutual funds. However, we did not discuss Investkraft’s LAMF application process step-by-step. So, in this blog, we will discuss the step-by-step guide to our loan application process against mutual funds. 

How Do I Apply for a Loan Against My Mutual Funds Portfolio?

This guide on the Investkraft website will help you easily for a Loan Against Mutual Fund (LAMF). It is designed to be user-friendly and straightforward, ensuring it can be followed by individuals of all technical backgrounds. 

Before you begin:

• Ensure that you have your registered phone number and PAN card details readily available
• In addition, it is important to have a valid and currently functioning email address

Step 1: Login or Sign Up

1. Head over to the InvestKraft website
2. Please log in to your Investkraft account using the login credentials if you already have one
3. When joining Investkraft, signing up for an account is necessary. However, the process is typically simple and quick

Step 2: Navigate to the Loan Against Mutual Fund Section

1. Once you're logged in, you have two options:
   • Option 1: Access the LAMF application page directly by clicking this link - https://www.investkraft.com/
   • Option 2: To navigate through the website, look for the “Loans” or “Investkraft Loan Products” section. Within that section, find the option for “Loan Against Mutual Fund” or “LAMF” and click on it to proceed

Step 3: Apply for the Loan

1. Click on the “Apply for Loan Against Mutual Fund” option on the LAMF application page to start the application process. This will allow you to initiate the process of obtaining a loan using your mutual fund investments as collateral
2. When you have multiple loan partners to choose from, it is important to select the one that best meets your needs. For LAMF at this time, you should consider “Abhi Loan” or any other partner that Investkraft recommends. Make sure to carefully review the terms and conditions offered by each partner before making a decision

Step 4: Verification and Information Input

1. Please provide the requested personal information such as your phone number, PAN card details or others, as indicated on the page
2. After you complete the registration process, a one-time password (OTP) will be sent to your registered phone number for verification. You will need to enter the OTP into the specified field to confirm your identity and complete the verification process
3. Once verified, please provide us with your full name and email address

Step 5: Review Loan Eligibility and Apply

1. Investkraft will show your mutual fund holdings and the eligible loan amount based on those holdings once you provide your details
2. Click on the “Apply” button if the loan amount and terms meet your requirements

Step 6: Complete the Application on the Partner's Website

1. Clicking on the “Apply” button will redirect you to the Abhi Loan website or potentially the website of a relevant partner
2. To apply for a loan on the partner’s website, you will need to go through their unique application process. This might require you to provide extra details or submit additional documents

Important Note: Please take note that while Investkraft starts the process, the ultimate approval and disbursement of the loan will be managed by Abhi Loan or its affiliated partner.

Step 7: Track Loan Status

1. After finishing the application on the partner’s website, you will automatically be redirected back to Investkraft. This seamless transition ensures that you can continue your investment process without any interruptions
2. Check your Investkraft dashboard to view the current status of your loan application
3. Investkraft will provide regular updates on your loan status through notifications or updates in your dashboard. Alternatively, you can manually check the status by visiting https://www.investkraft.com/.

Additional Notes:

• The time for loan disbursal varies depending on the partner’s procedures
• After the loan amount is transferred to your account, Investkraft will send you a notification to confirm the successful crediting of the funds

Frequently Asked Questions (FAQs)

 

Q: What exactly is a loan against mutual funds?

A: A loan against mutual funds (LAMF) is a type of loan that uses your mutual fund holdings as collateral. The lender will give you a loan based on a percentage of the current market value of your mutual funds. This means that your mutual fund units serve as security for the loan

Q: How long does the loan against mutual funds application process take?

A: Lenders typically have varying processing times for LAMF applications and the speed can depend on factors such as the complexity of the application and the lender’s specific procedures. Online applications often have quicker processing times compared to offline submissions, but it is important to confirm the estimated timelines with the lender directly 

Q: What are the first steps to consider before applying for a LAMF?

A: Before beginning the application process, it is important to have a few key factors in mind:

• Eligibility: You should carefully review the lender’s eligibility criteria before proceeding. This usually involves meeting a minimum investment amount in specific mutual fund schemes and having a satisfactory credit history. It is important to ensure that you meet these requirements before applying 
• Alternatives: Consider exploring alternatives to a LAMF like utilizing an emergency fund, negotiating payment plans with creditors or using a credit line for smaller expenses. Keep in mind that a LAMF may not be the optimal choice for every circumstance
• Understanding the Risks: LAMFs come with certain risks, such as market fluctuations and the possibility of margin calls. If the value of your mutual fund has a significant decline, you may be asked to provide more collateral or repay a portion of the loan to meet the necessary loan-to-value ratio

Q: How do I choose the right lender for a loan against mutual funds?

A: Choosing the right lender is vital for the terms of your LAMF. Key factors to consider include:

• Interest Rates: When comparing interest rates, it is important to consider multiple leaders to find the most advantageous deal. By looking for lenders with competitive rates and minimal processing fees, borrowers can secure a more favourable loan. This ensures that they are getting the best possible terms and saving money in the long run
• Loan-to-Value Ratio (LTV): The LTV ratio is a crucial factor in determining the maximum loan amount you can borrow based on the market value of your mutual funds. It is important to select a lender that offers a high LTV ratio that aligns with your specific borrowing needs. By doing so, you can potentially access a larger loan amount, providing you with more financial flexibility
• Repayment Terms: When considering repayment terms, it is important to carefully assess the options available from different lenders. Evaluate factors such as loan tenure and prepayment flexibility to find the most suitable plan. Take into account your current financial situation and choose a repayment plan that aligns with your ability to manage it comfortably