Loan Against Mutual Funds And Shares

We cannot predict when a financial crisis can happen. There are good possibilities where there will be a demand for money in a very short notice. In this situation, people do not opt for loans from banks because it is a lengthy process. But the fact is that there are few ways through which we can get loans from the banks. Some of them are getting a loan against mutual funds and shares which is one of the most common types of Christmas loans London.

Loan against mutual funds

Loan against mutual funds is, without a doubt, one of the easiest alternatives for traditional loans. The biggest advantage is that you not have to redeem your units in a premature state. The best part is that your systematic investment plan can continue without any issues.

It is a very similar process to overdraft facility that most of the banks offer. These loans can be secured by approaching a bank or a non-banking financial company. In this process, you will be pledging your mutual funds as security. The loan amount will vary according to the value of the mutual funds.

Interest rates

Generally, for the loan against mutual funds, the interest rate will be between 10 – 11%. There will be a lot of terms and conditions designed by the bank. Compared to unsecured loans like personal loans, the interest rate is much lesser. If you have a good credit score or if you are a customer of the bank for a long time, there are possibilities that the interest rate will be lowered.

Loan against shares

Another way of securing loans easily is by getting a loan against shares.  It is one of the simplest ways to instantly raise money without selling them. Loan against shares is the process by which you pledge your shares against the loans that you will get from the bank.

This process is more like overdraft facility offered by the banks. You can withdraw the money from the account, and you can pay the interest for the money that you use. The loan amount entirely depends on the value of the shares. These shares will be collateral until the loan amount is repaid with interest.

Interest rate

The interest rate for loan against shares will be around 10 – 12%. You can reduce the interest rate if you are a customer of the bank for a long time. For the interest deduction, there are a lot of parameters that will be considered, which include good credit score, transaction history and a lot of others.

Advantages of taking a loan against mutual funds and shares

There are a lot of advantages to taking a loan against securities. Some of them are instant approval, low-interest rate, pay interest one of the money that you use, no need any documents, flexibility in various things, no payment penalty and high collateral value.