Sometimes you need funds for a business requirement, an emergency or a planned expense — but selling your investments may disrupt your long-term plan. A Loan Against Securities (LAS) offers another option.
How it works
With LAS, eligible mutual fund units or shares are pledged with a lender as collateral. The lender offers a credit limit based on the value of the pledged securities and the applicable loan-to-value ratio. Your investments remain in your name and continue to stay invested while pledged.
Why investors consider it
LAS can help you meet short-term liquidity needs without redeeming investments at an inconvenient time. Interest is typically charged on the amount you actually use, depending on the lender's terms.
Points to keep in mind
The value of pledged securities moves with the market. If it falls, the lender may ask you to add collateral or repay part of the loan. Interest rates, processing fees, eligible securities and loan-to-value ratios vary between lenders, so compare terms carefully and borrow only what you can comfortably repay.
Is it right for you?
LAS is best suited to short-term, planned needs. It should be considered as part of your overall financial plan, taking into account your cash flows and risk profile.
Disha Finedge can help you understand eligibility and connect you with suitable lending partners.
This article is for general investor education only and is not investment advice or a recommendation. Mutual fund investments are subject to market risks; read all scheme-related documents carefully before investing. Insurance and loan products are subject to the terms of the respective insurer or lender.
Loan Against Securities: access liquidity without selling your investments
Need funds for a short-term requirement? A Loan Against Securities may let you borrow against your mutual funds or shares while staying invested.
