Can I use mutual funds as collateral for a loan?

Yes, you can use equity and debt mutual funds as collateral for a loan. The loan amount is determined based on the market value of your pledged mutual funds.

Can a mutual fund be used as collateral for a margin account?

Yes, some lenders allow mutual funds to be used as collateral for margin accounts. However, the terms and conditions vary depending on the lender and the fund type.

What cannot be accepted as collateral for a loan against mutual funds?

Tax-saving mutual funds (ELSS) under the lock-in period and mutual funds with insufficient liquidity or value are typically not accepted as collateral.

What are the rules for using mutual funds as collateral for a loan?

The mutual funds must be in your name, and their value should meet the lender’s minimum requirements. The lender will mark a lien on the pledged funds, restricting their redemption until the loan is repaid.

Home > Blogs > Loan Against Mutual Funds: Choosing the Right Mutual Funds for Collateral

Liquify | Thursday, January 16th, 2025, 9:31:05 PM

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