Should You Take a Loan Against Your Mutual Fund or SIP?

When sudden financial needs arise, people seek quick and easy borrowing options. In addition to conventional options like a gold loan, taking a loan against mutual funds is quite helpful, more so for investors who do not want to redeem their portfolio.

The loan on a mutual fund works by pledging your existing units to get funds instantly. Your investment remains active, and your ongoing SIP continues uninterruptedly. This type of mutual fund loan may be handy when you need liquidity without disturbing long-term financial goals. A personal loan is equally good for those who want to borrow a fixed sum in a structured repayment format.

Before choosing a loan against SIP, keep the following points in mind.

Confirm which of your mutual fund units are eligible for pledging.

Review your options, gold loan, personal loan, and mutual fund loan, separately to match your requirement.

Understand the loan-to-value limit offered on pledged units.

Learn how to take a loan against mutual funds through online pledging services.

Borrow only what you really need for better financial control.

A loan against mutual funds is a workable and flexible solution, thereby helping you access funds while keeping your investments intact.