You can take loans against your invested securities through major banks and NBFCs, such as:
- ICICI securities
- HDFC securities
- Aditya Birla Capital
- Motilal Oswal
- Bajaj Finance
But these banks, NBFCs, usually won’t be the best way to get a loan against your investments, especially if you are a beginner. The process is always lengthy. You have to talk to managers, negotiate and get through tons of paperwork.
So, below are some of the other platforms you can look into to get better interest rates, customer support, and overall a better experience. Compared to banks.
MoneyJar is probably the easiest way to get a loan against your mutual fund investments. However, there is one mandatory clause:
- You need an active HDFC bank account.
- Only CAMS serviced mutual funds are applicable for loans.
With MoneyJar, you can get a loan against investments with any AMC which has CAMS as its RTA, such as ICICI, Aditya Birla, HDFC, DSP and more.
However, AMCs like Axis Mutual Fund won’t be eligible to get a loan via MoneyJar since its RTA is Kfintech, formerly known as Karvy.
This is the best platform to get a mutual fund overdraft loan if you’re completely new to this and want to keep everything simple. You wouldn’t have to worry about too much paperwork, calls or going through a lengthy process. It’s as simple as it can get with MoneyJar.
You need to fill out an application form, check your eligibility, and MoneyJar experts will reach out to you when your application is processed. It’s a complete digital, no paperwork process and won’t take weeks to process.
Once your overdraft limit has been set, you can choose when and how much of the disbursed overdraft amount you wish to transfer into your HDFC bank account. The interest is only applicable to the amount you use from the overdraft limit. Not on the entire loan capital allotted to you. How much of the overdraft limit you use is entirely up to you.
– If you’re a total beginner, MoneyJar is the best place to get a loan against your mutual funds.
Essentially, INDmoney is a portfolio tracking/investment app. However, they offer family office services, so I thought including them in this list would make sense.
With INDmoney, you can get a loan against your mutual funds in a much more formal and lengthy process compared to MoneyJar.
And it’s going to cost you more.
First, you will need to subscribe to an INDMoney membership plan starting at INR 999/month and then you will have to pay any fees/charges the INDmoney family office team asks you to.
Keep in mind, here you will have a team of finance professionals helping you. They will take care of the taxes, loan process, paperwork and anything else required in getting you the loan.
A mandatory clause to get a loan against your investments via INDmoney is a CRIF credit score of 750+.
Not only can you get a loan against your mutual funds, but INDmoney will also help you get a loan against your other investment assets.
So, if you need a loan against mutual funds plus other assets in your portfolio while having a team of professionals to help you out, INDmoney might be a good choice.
You might know Zerodha provides margin against pledged holdings, but they also provide loans against securities held under your Demat account.
Zerodha recently launched their Loan Against Security subsidiary called Zerodha Capital.
If you have a Demat account and hold shares, mutual funds, or other investment instruments linked to your Zerodha account – Zerodha Capital is the easier way to get a loan against your investments.
It’s a completely digital process. All you have to do is apply for Zerodha Capital, connect your account, sign the loan papers digitally and the disbursed amount will be deposited into your bank account.
The interest rate offered by Zerodha Capital as of 26th October 2021 is 10.5% per annum, which is lower than MoneyJar. They advertise this interest rate as fixed. However, under the FAQ section, Zerodha says they can change the interest rate based on economic conditions.
You will have to make sure you read the terms and conditions thoroughly before opting for a loan against securities. I suggest hiring a lawyer if you’re taking a loan for business purposes or greater than INR 15 Lakhs.
That’s it – these are the three best places to get a loan against mutual funds.
Let me know if you have any questions.