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 if you default on the loan. Despite this, you continue to own the mutual fund units, and they remain in your demat account.