A lien allows lenders to hold and sell mutual fund units as collateral for a loan. The loan amounts and interest rates vary by bank but are typically lower than unsecured personal loans. Banks maintain approved lists of mutual fund schemes that can be used as collateral and may not accept units with mandatory lock-in periods less than 3 years. It is best to avoid loans against mutual funds when fund performance is uncertain or if repayment ability is in question.

1. GETTING A LOAN AGAINST
Mutual Funds
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A lien is a document which gives the
lender right to hold and sell the
mutual fund units as collateral for the
loan.
WHAT IS A LIEN ?
The rates differ from bank to bank,
but lower than the rates on
unsecured personal loans.
HOW MUCH LOAN YOU CAN GET?
Each bank has a list of approved
schemes they can take collateral.
Many banks do not take ELSS units
which are still in a 3-year lock in
period as collateral.
WHICH MUTUAL FUNDS CAN BE USED?
When the mutual fund is performing
well.
When you are unsure whether you
can pay back the loan.
WHEN TO AVOID TAKING A LOAN
AGAINST MUTUAL FUNDS?