Loan Against Mutual Funds (LAMF) – Features, Eligibility, Interest Rate

A Loan Against Mutual Funds (LAMF) is a financial product that allows investors to borrow money by pledging their mutual fund investments as collateral. Instead of selling your mutual fund units during a financial crunch, you can use them as security to obtain a loan. This type of loan is typically offered by banks and Non-Banking Financial Companies (NBFCs).

When you take a loan against mutual funds, the lender marks a lien on your mutual fund units. A lien is a claim on your assets that ensures the lender has a right to your mutual fund units in case you default on the loan. Despite this, you continue to be the owner of the mutual fund units, and they remain in your demat account.