Loan Against Mutual Funds in 2025: A Smart Way to Borrow Without Breaking Your Portfolio
We’ve all faced moments when we needed urgent cash—be it for medical emergencies, business needs, or personal goals. But what if you could unlock money without selling your investments? That’s exactly what a loan against mutual funds offers in 2025. It’s fast, flexible, and keeps your wealth intact.
Instead of liquidating your portfolio, you can pledge your mutual fund units and borrow against them. Your investments continue to grow while you get the liquidity you need. It’s a win-win solution for smart investors who want to stay financially agile.
What Is a Loan Against Mutual Funds?
A loan against mutual funds (LAMF) allows you to borrow money by pledging your mutual fund units as collateral. You don’t have to sell your holdings. Instead, your lender marks a lien on your units and offers a loan based on their value.
You can borrow against:
- Equity mutual funds
- Debt mutual funds
- Hybrid mutual funds
The loan amount typically ranges from 50% to 70% of the fund’s current NAV, depending on the type of fund and the lender’s policy.
Latest Updates in 2025: What’s New?
According to recent reports:
- Platforms like PhonePe (in partnership with DSP Finance) now offer instant loans against mutual funds directly through their apps
- Trade Brains lists the top 5 platforms offering LAMF with low interest rates and fast approvals
- Digital KYC and e-lien marking have made the process seamless
- No foreclosure charges on most platforms
- Loan tenure ranges from 3 months to 36 months
This makes LAMF a better alternative to personal loans, especially for investors who want to retain their portfolio.
Top Platforms Offering Loan Against Mutual Funds in India (2025)
Here are some trusted platforms:
- PhonePe + DSP Finance – Instant loan via app
- Groww – Easy interface and quick approvals
- ICICI Direct – Offers loans against both equity and debt funds
- HDFC Securities – Competitive interest rates
- Paytm Money – Integrated with mutual fund dashboard
These platforms offer digital onboarding, real-time NAV tracking, and flexible repayment options.
Benefits of Loan Against Mutual Funds
- No need to sell your investments
- Lower interest rates than personal loans
- Quick disbursal—often within hours
- Continued returns on your pledged units
- Flexible repayment and tenure options
- No impact on credit score if repaid on time
It’s ideal for short-term liquidity without compromising long-term wealth.
How to Apply for a Loan Against Mutual Funds
Here’s a simple step-by-step guide:
- Choose a platform (e.g., PhonePe, Groww, ICICI Direct)
- Complete digital KYC
- Select mutual fund units to pledge
- Lien is marked on your units
- Loan is disbursed to your account
- Repay in EMIs or lump sum as per your plan
You can track your loan and fund performance through the app or web dashboard.
Risks and Considerations
While LAMF is smart, keep these in mind:
- Market volatility can affect NAV and loan eligibility
- Margin calls may occur if fund value drops
- Interest rates vary across platforms
- Loan default can lead to fund liquidation
Always borrow responsibly and ensure you can repay on time.
Final Thoughts: Stay Liquid Without Losing Growth
In 2025, a loan against mutual funds is one of the smartest ways to stay financially flexible. Whether you need emergency cash or want to fund a short-term goal, LAMF lets you borrow without breaking your investment momentum.
With digital platforms making the process seamless and secure, it’s time to explore this option and make your money work smarter.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Loan terms, interest rates, and eligibility criteria may vary. Please consult your financial advisor or lending institution before applying.
