Loan Against Securities: Banks and NBFCs usually offer loans against mutual funds and shares for a maximum tenure of 36 months i.e. 3 years.
Loan Against Securities: Investing in securities (shares and other investments) not only gives you good returns, but you can also meet your needs by selling it immediately at the time of need. But if you do not want to break your investment, then you can also take a loan against securities.
Many people have lost their jobs due to Kovid 19. In this case, to meet the need of money, you can take a loan against your investment in shares, mutual funds and bonds. In this way the loan is easily available. However, before taking a loan against such investment, do consider the terms of the bank, interest rates and processing fee.
How much loan can I get
If you are planning to take a loan against any investment like shares, mutual funds, bonds or insurance policies, then you can get a loan of 50 to 60 percent against the investment amount. On the other hand, banks can give loans of higher amount in lieu of debt mutual funds, as there is not much volatility in its returns. At the same time, the risk is seen more in stocks, due to which the loan is less on them.
how much interest will be charged
Banks offer loans at two to three per cent higher than home loan interest rates against investments related to the stock market and insurance. These rates are much cheaper than personal loans. At present, various banks and NBFCs are giving loans against shares at rates ranging from 9.25 per cent to 18 per cent.
Get loan for short time
Banks and NBFCs generally offer Loan Against Securities for a maximum tenure of 36 months i.e. 3 years. Some lenders offer flexible repayment option to repay the loan, wherein the borrower pays the interest every month and the principal amount is to be paid at the end of the tenure of the loan.
The impact of a fall in the stock market
If there is a significant fall in the value of the shares during the loan tenure, i.e. the value of your shares falls substantially, the bank may raise the value of your pledged shares by placing more shares as collateral or by adding necessary cash funds. may be asked to fill the gap.
On taking a loan against securities, the bank may charge you the processing fee, stamp duty charge on the loan agreement and pledge creation fee etc., in addition to your processing fee.