Loan against Mutual Funds

Common Reasons to Use Loan Against Mutual Funds

A Loan Against Mutual Funds (LAMF) is a smart and flexible solution for those who want access to liquidity without disrupting their long-term investment goals. Here are some of the most common real-life scenarios where individuals and business owners choose to avail LAMF:

1. Business Expansion or Working Capital Needs

Entrepreneurs often use LAMF to fund short-term working capital gaps, vendor payments, or even business expansion — all without disturbing their equity or debt fund investments.

“Instead of going through long documentation for a business loan, I pledged my mutual funds and got an overdraft limit the same day.” - Says Deepankar

“Instead of going through long documentation for a business loan, I pledged my mutual funds and got an overdraft limit the same day.” - Says Deepankar

2. Emergency Medical Expenses

Health emergencies require quick access to funds. With LAMF, you don’t have to redeem long-term mutual fund holdings or break FDs at a penalty — just pledge and access funds instantly.

3. Avoiding Redemption During Market Volatility

Many investors avoid redeeming during market corrections, as doing so locks in losses. LAMF allows you to meet financial needs while keeping your investments intact and ready to recover.

“Markets were down, but I needed money urgently. I pledged my equity mutual funds instead of selling them at a loss.” - Says Sunil Sharma

“Markets were down, but I needed money urgently. I pledged my equity mutual funds instead of selling them at a loss.” - Says Sunil Sharma

4. Short-Term Personal Needs

Whether it's a home renovation, destination wedding, or higher education fees, LAMF can act as a bridge loan without putting long-term plans at risk.

5. Debt Consolidation or Credit Card Payments

Instead of paying high interest on credit card dues or personal loans, many users pledge mutual funds to get a much lower interest rate on their loan — saving money in the process.

“I was paying 36% on my credit card. I replaced it with a 10% loan against mutual funds. It was a game-changer.” - Says Ravi Kumar

“I was paying 36% on my credit card. I replaced it with a 10% loan against mutual funds. It was a game-changer.” - Says Ravi Kumar

What Investors Say About Using Loan Against Mutual Funds

Don’t just take our word for it — here’s what real users have to say about their experience with LAMF:

“I needed ₹5 lakhs urgently for bulk inventory purchase. Instead of applying for a new loan, I pledged my mutual funds and got an overdraft facility the same day. No need to disturb my SIPs or go through lengthy paperwork.”

“I had to arrange funds for an emergency surgery in my clinic. LAMF helped me access ₹8 lakhs in less than 24 hours, without liquidating my investment portfolio.”

“LAMF is perfect for professionals like me with variable cash flows. I use the overdraft when needed and pay interest only on the amount I use. It’s like having financial freedom on standby.”

List of Eligible AMC for Loan against Mutual Funds

If you're looking to avail a loan against mutual funds, it's important to know which Asset Management Companies (AMCs) are eligible for lien marking and pledge under this facility. At DhanLAP, we work with a broad network of SEBI-registered AMCs to help you unlock the value of your investments without having to redeem them.

What Does “Eligible AMC” Mean?

• An eligible AMC is an Asset Management Company whose mutual fund schemes are approved by our banking/NBFC partners and registrar & transfer agents (RTAs) such as CAMS and KFintech for lien marking. This enables investors to pledge mutual fund units held under these AMCs to avail loans or overdraft facilities.
• These AMCs support digital pledge and de-pledge mechanisms, making the loan process smooth, secure, and fully online.

List of Eligible AMC for Loan against Mutual Funds

You can avail a loan against mutual funds for schemes managed by the following eligible AMCs: