What is a good LTV in a loan against mutual funds?

For equity mutual funds, borrowing at an LTV of around 35% to 45% is generally considered a safer range because it provides a buffer against market volatility and reduces the likelihood of a margin call.

Why does LTV matter for borrowers?

The Loan-to-Value (LTV) ratio determines your eligible loan amount, available credit limit, and the likelihood of receiving a margin call if the value of your pledged mutual fund units falls.

How is LTV calculated in a loan against mutual funds?

LTV is calculated using the formula: (Outstanding Loan Amount ÷ Current Market Value of Pledged Mutual Fund Units) × 100. The ratio is recalculated based on the latest Net Asset Value (NAV) of the pledged units.

Can LTV change after I take the loan?

Yes. The Loan-to-Value ratio changes as the Net Asset Value (NAV) of your pledged mutual funds changes. A rise in NAV reduces the LTV, while a fall in NAV increases it. Partial loan repayments also reduce the LTV.

What triggers a margin call in a loan against mutual funds?

A margin call is typically triggered when your LTV exceeds the lender's internal threshold due to a fall in the value of your pledged mutual fund units. The lender may ask you to pledge additional units or partially repay the loan to restore the required LTV.

Loan Against Mutual Funds LTV: What It Means and How It Works

Home > Blogs > Loan Against Mutual Funds LTV: What It Means and How It Works

Liquify | Thursday, July 9th, 2026, 4:02:13 PM

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