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March 2020
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Mutual funds are one of the most sought-after investment options preferred by salaried and self-employed professionals. Did you know that you could avail a loan against your mutual fund instead of breaking it to fulfill any of your financial obligations? All you must do is find a suitable lender like a NBFC and financial institutions and pledge your mutual fund as security. The lender will run a background check on your security documents, your credit score and assess your pledged security. Based on which they will determine your home loan amount and eligibility. the amount could be up to 50-60% of the value of the pledged mutual fund. As an investor bear in mind few things to apply for a loan against shares. • Any default in the loan amount will lead you losing your invested money in the mutual fund. The lender has the right to sell your mutual fund and recover their loan amount.
• Loan can be taken against those mutual funds which do not have a lock-in period set. For eg., you cannot obtain a loan against ELSS or tax saving funds. • Such a loan can be taken only in the event of dire cash needs. It is advisable to not pledge your security for reasons such as making a big-ticket purchase, funding a vacation etc. There are simple eligibility criteria to avail this loan against mutual fund – borrower must be at least 25 years or above with a regular source of income like a job or business. The process needs you to provide basic documentation such as ID proof, address proof, document proof of securities and passport size photograph. Read More :- Important Tips to Help You Qualify For Loan Against Mutual Funds
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Mr. Sharma, a 50-year-old resident of Hyderabad, wanted to take a loan to fund his daughter’s marriage. He applied for a loan against property worth Rs 5 lakh at a local bank in his area. However, the very next day he got a call from the bank and he was told that his loan application was rejected due to his low repayment capacity i.e his insufficient monthly income. He was devastated by the news and got really stressed, having no idea how to arrange the money to pay for his daughter’s wedding. Just then, his eldest son Ramesh suggested Mr. Sharma to re-apply for the loan by adding him as the co-applicant this time. He followed the advice and re-applied for a loan against property, and to his amazement, his loan application was approved. Owing to the reference of Mr. Sharma shared above, if you are planning to take a loan but your monthly income is not in accordance to your expectations, adding a co-applicant in your loan application can help. The ‘addition of a co-applicant’ has aided many prospects who wanted to take a loan but weren’t able to do so due to their low repayment capacity. However, adding a co-applicant boosted the gross income with lower Loan Against Property Interest Rates of the primary borrower, and they were finally able to apply and get approved for the loan.
Moving on, if you are planning to leverage from this clause, you must know who all can be added as co-applicant.
Lastly, the policies regarding the addition of co-applicant vary from one financial institution to another. Thus, apply only after confirming the same with the lender. Also Read here to know more about: Who can be a Co-Applicant for my Loan against Property? |