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A Loan Against Mutual Funds (LAMF) is a secured loan where investors pledge their mutual fund holdings to get funds. The interest rate on such loans is much lower than unsecured options like personal loans, making it an attractive option for borrowers in India.
But what determines the interest rate on a loan against mutual funds? Which banks and NBFCs offer the best rates? And how can you get the lowest rate possible? Let’s dive in!
The interest rate on a Loan Against Mutual Funds depends on several factors, including:
Typically, the interest rate on LAMF loans in India ranges between 7% and 11% per annum, which is significantly lower than personal loan rates.
📌 Related: Loan Against SIP – Is It Right for You?
| Lender | Interest Rate (Per Annum) | Processing Fee (excl. GST) | Max Loan Amount |
|---|---|---|---|
| HDFC Bank | 11.50% – 12.50% | ₹1,999 | ₹10 Crore |
| ICICI Bank | 12.00% – 12.50% | 1% of Loan | ₹5 Crore |
| Yenmo | 10.00% – 10.50% | ₹999 | ₹5 Crore |
👉 Note: You can get a higher loan amount on debt mutual funds, because they are less volatile compared to equity mutual funds
However the interest rate for a LAMF would be lower than the personal loan interest within the same lender
Increase in Repo rate would increase the interest, while a decrease in repo would reduce the interest rate
Compare lenders before applying (Banks vs. NBFCs).
Try to pledge a larger amount, generally banks/nbfcs can offer a reduction if you open an account for over Rs. 1cr
Check to see if the lender has any offer running that offers a referral bonus or cashback on processing fees
Pro Tip: Try using the Yenmo app to view all your investments in one place and check your interest rate instantly
Related: Loan Against Mutual Funds Online – Apply Instantly
| Feature | Loan Against Mutual Funds | Personal Loan |
|---|---|---|
| Interest Rate | 10% – 11% | 12.50% – 25% |
| Collateral Required? | ✅ Yes (Mutual Funds) | ❌ No |
| Approval Time | Instant – 24 Hours | 1 – 3 Days |
| Max Loan Amount | ₹10 Crore | ₹50 Lakh |
| Best For | Lower interest financing | Urgent cash needs |
Verdict: If you have mutual funds, a Loan Against Mutual Funds is a cheaper and smarter choice than a personal loan.
A Loan Against Mutual Funds is an excellent option for those looking for low-interest financing without selling their investments. By choosing the right lender and mutual fund type, you can secure an interest rate as low as 7% per annum.
Want to apply for a Loan Against Mutual Funds? Check out our Loan Against Mutual Funds Home Page for a complete guide and application process! 🚀
