Loans against mutual funds (LAMF) provide an easy way to raise cash flow without liquidating your assets and losing out on their growth potential. Under LAMF, you pledge your mutual fund units as security for the loan to meet your immediate cash requirements.
To estimate the maximum loan amount you can secure against your mutual funds, you can use a loan against mutual funds calculator. This blog covers how to use a loan against mutual funds calculator in detail.
A loan against mutual funds calculator is a simple digital tool that calculates the maximum loan amount you can secure against the mutual funds held by you. You need to enter details like the mutual fund name and number of units to start the estimation process. The loan against mutual funds calculator tool uses the net value of your mutual funds to estimate the eligible loan amount, applicable interest rate, and payable monthly interest.
A loan against mutual funds calculator is freely available on select lender portals. Here’s a step-by-step guide to using one:
If you have invested in multiple mutual fund schemes, you can keep adding them to the list to calculate your total loan amount and interest burden. Alternatively, you can select the ‘Delete’ option to remove a MF scheme from the list. Moreover, you can run multiple simulations to estimate your loan amount and interest charges.
To understand how to get a loan against mutual funds, you need to know how a loan against mutual fund calculator works. Here are a few things you should know about how LAMF calculators operate:
Most loan against mutual fund calculators have a preloaded list of schemes accessible through the dropdown menu. This is the lender’s approved list of mutual fund schemes you can secure a loan against. In other words, if the mutual fund scheme is not listed on the calculator, the lender might not offer a loan facility against it.
Loan against mutual fund calculators determines the eligible loan amount based on your mutual fund units' NAV or net asset value. Funds with a high NAV can help you secure a higher loan amount. However, the eligible loan amount will also depend on the LTV ratio for the fund.
LTV or loan-to-value is the maximum proportion of an asset’s value you can secure as a loan. Lenders can sanction up to 80% of the NAV for debt mutual funds. However, the LTV cap is placed at 50% of the asset’s NAV for equity funds since equity funds are more volatile. LTV caps may vary from one lender to the next.
The number of mutual fund units you pledge will also affect the eligible loan amount and interest charges. Pledging more mutual fund units will automatically increase the sanctionable loan amount. However, lenders also have minimum and maximum loan caps on LAMFs. Most offer up to Rs. 20 Lakhs on equity funds and up to Rs. 1 Crore on debt funds.
For estimation purposes, most loan against mutual funds calculators display the interest payable on the assumption of 100% fund utilisation in 12 months. However, when you apply for the loan, interest charges will be calculated only on the utilised principal amount and the utilisation duration.
For most people wondering how to get a loan against mutual funds, learning how to use a LAMF calculator is important. A LAMF calculator helps you estimate the eligible loan amount and decide if it meets your requirements. If these estimates fail to meet your needs, you can always opt for alternative credit sources to secure a higher loan amount.
Since only some lenders offer the LAMF facility for short-term credit, you can fall back on instant loans. Fi Money provides instant loans that arrive directly in your savings account. These are pre-approved personal loans made available to select users with good credit scores. On Fi, this process is 100% paperless, and the loans are provided at competitive interest rates — where each user remains in control with complete visibility of all details. Plus, you can avoid EMI late fees by setting up automatic in-app payments. Our licensed partner bank assigns an eligible loan amount to each user (up to ₹5 lakh).
A LAMF calculator uses input like the stock name and units to determine their NAV and estimate the maximum loan amount and interest charges for the loan.
Yes. LAMF calculator tools available online help you estimate the principal loan amount you can get by pledging your MF units.
Loan against mutual fund calculators takes the mutual fund type, units, and NAV into account to determine your loan eligibility.
Yes. LAMF calculators are easily available online. These digital tools are accessible to all, completely free of charge.
As digital tools, loan against mutual fund calculators offer fairly precise and accurate estimates of the loan amount and interest charges. However, these can vary when you apply since interest is charged on the utilised loan amount and varies depending on the tenure.