Exiting a mutual fund before it attains maturity means having to pay an extra charge as a penalty. Also as mutual funds fetch you gain from the market, untimely withdrawal may not give you the returns you had expected. So instead of selling your mutual funds you should pledge them as collateral and take a loan against mutual funds instead. 

Why is applying for a loan against mutual funds beneficial?

Investing in mutual funds can fetch you up to 12% as interest on average. Moreover, you can claim tax deductions using this investment. So, it is always better to avail a loan against high-value mutual funds rather than selling them to raise money. Also, pledging your mutual funds for a loan against mutual funds allows you to avail a hefty sanction. For instance, lenders like Bajaj Finserv give you a secured Loan Against Mutual Funds or a Loan Against Securities up to Rs.10 crore with other benefits like a flexible tenor, easy eligibility criteria, quick disbursal and a relationship manager.

You can also avail the loan as a Flexi Loan. This means that you can withdraw funds from your sanction as per your needs and pay interest on the amount you use. Moreover, you can choose to pay interest-only EMIs through the tenor and repay the principal at the end. This helps save 45% on EMIs. You can also swap your mutual funds anytime during the tenor with other high-value securities. Similarly, you can release them by making pre-payments on your loan against mutual funds at no extra charge.

How to apply for a loan against mutual funds?

In order to apply for a Loan Against Mutual Funds from Bajaj Finserv, you need to qualify for it first by meeting simple eligibility norms. As per the terms of the loan you can apply if you are at least 21 years old, a resident citizen of India earning a regular income, and have securities worth Rs.10 lakh or more.

Then submit a short online application form by filling out basic details. After this, you will get an SMS and email from Bajaj Finserv confirming the status of your application. Next, a representative will get in touch with you asking you to submit the necessary documents such as your identity proof, mutual fund ownership proof, address proof, and your passport size photograph. On successful verification, the loan will be disbursed to your bank account within 72 hours.