HDFC Loan Against Mutual Funds: How to Apply for a Digital LAMF at HDFC?
As an investor, you can always have phases of monetary spending, be it renovating your space, making significant purchases, or planning an extended vacation. If funds are a constraint, and you find yourself with a bunch of investments instead, you now can just pledge them to take out a loan. Similarly, if you have invested in HDFC mutual funds, smallcase gives you the option to avail an HDFC loan against mutual fund in just a matter of a few hours!
This loan is designed for Mutual Fund portfolio holders and can be secured against both Equity and Debt Mutual Funds. In smallcase, a loan against mutual funds has an interest rate of 10.75% currently. The application process for this funding option is entirely digital, adding to its convenience. Let’s learn more about this exciting feature!
HDFC Loan Against Mutual Funds on smallcase
Loan Against Mutual Funds allows you to borrow money using your mutual fund investments as collateral. This way, you have the option to do more with your investments while also continuing to stay invested in them. The HDFC loan against mutual funds is a simple process involving a completely digital application process that we will discuss in further detail below.
You can also access this option conveniently through the smallcase app by tapping ‘More’ from the bottom menu. Then select ‘Loan against mutual funds’ to assess eligibility and apply for a loan, all while retaining your assets intact.
How to Get HDFC Loan Against Mutual Funds Without Selling Your Investments on smallcase?
You can swiftly obtain a Loan Against Mutual Funds (LAMF) via the smallcase app’s entirely digital process, taking just 5 minutes. Utilize your mutual fund investments to establish an emergency credit line without liquidating your holdings. Access emergency funds within 3 hours, with mutual fund holdings serving as collateral at a 10.75% per annum interest rate.
To secure a LAMF through smallcase, follow these steps:
- Log in/download the smallcase app
- Navigate to the More tab and select Loan Against Mutual Funds.
- smallcase will then check your mutual fund holdings and display your maximum eligible loan amount as a credit line
- Click on Apply Now.
- Import your HDFC Mutual Fund Holdings and pledge them based on the loan amount.
- Proceed to confirm your loan amount. Note: you can choose to take only a part of the max eligible amount (not necessarily the entire amount).
- Enter your bank account details
- Sign the loan agreement.
- You will receive cash in your bank account within 3 hours.
In case it takes longer, you can always reach out to the smallcase support team at help@smallcase.com.
Loan Against Mutual Funds (LAMF) offers various benefits tailored to specific financial needs. Explore its potential to achieve your financial goals and ensure a prosperous future.
What is a Loan Against Mutual Funds?
You can leverage Mutual Funds (MFs) as collateral for a loan, similar to how you can pledge other assets such as gold or property. With smallcase, you can secure a loan against your HDFC mutual funds or otherwise at a competitive interest rate of 10.75% per annum. By digitally lien marking your mutual funds, you can instantly access a loan without liquidating your investments.
This loan, provided as an overdraft facility, offers flexibility in fund access and repayment without additional fees. Interest on the loan against mutual funds in HDFC is charged only on the utilised amount and duration.
Choose from various approved HDFC mutual funds offered by different asset management companies in India as collateral. Reliable Registrars & Transfer Agents (RTAs) such as CAMS and KFintech (formerly KARVY) facilitate securing the loan against your MFs at smallcase. For those seeking short or medium-term financial solutions, pledging their HDFC MFs for a loan through smallcase can be a wise choice.
Note: This information regarding interest rates was updated on April 18th. For the latest updates on interest rates, fees, and charges, visit the smallcase help centre for LAMF.
Documents Required to Avail an HDFC Loan Against Mutual Funds on smallcase
You can apply for an HDFC loan against mutual funds seamlessly through the smallcase app’s fully digital process. The only documentation you will need is:
- PAN information
- Phone number/email linked to your mutual funds
- Some users may need to share their Aadhar Cards for verification
- Bank account information for fund transfer
- E-sign the online loan agreement to finalize the loan amount and submit it for approval.
Upon approval, you can expect funds in your account within 3 hours. For assistance, contact our support team at help@smallcase.com.
Will the HDFC Funds Still Generate Returns After Getting Pledged for Loans?
Yes, you will continue earning returns on your HDFC funds even after pledging them as loan collateral. However, it is not possible to redeem/sell those funds after you have pledged them for loans on smallcase. You must wait until the loan is repaid to take any of those actions.
Can You Sell Your HDFC Mutual Funds After Pledging Them for Loans on smallcase?
No. You can only continue generating returns on your investments after plkedging them for loans. You can only redeem/sell these HDFC fund investments after the loan amount is completely repaid.
What Happens in the Case of Active SIPs or Invest More (Lumpsum Investments) in Pledged HDFC Mutual Funds?
Additional investments in pledged mutual funds, whether made in lump sum or through SIP orders, remain unaffected. Unit holders retain complete control over these investments, as they do not automatically become pledged.
Moreover, pledging funds for loans through smallcase temporarily suspends any Active System Transfer Plan (STP) or Systematic Withdrawal Plan (SWP) initiated by the investor.
Maximum Loan Limit on Your HDFC Mutual Fund Investments
Your credit limit represents your maximum loan borrowing capacity based on your eligible mutual funds. It’s calculated by applying a percentage to the value of the mutual funds you intend to use as collateral.
In smallcase, equity mutual funds allow borrowing up to 45%, while debt mutual funds allow borrowing up to 75%. At smallcase, HDFC loan against mutual fund can start from ₹25K and can go up to ₹5 Cr. However, for latest details, please visit our smallcase LAMF help centre.
Terms of Loan Closure, Charges & Interests for HDFC Loan Against Mutual Funds on smallcase
Once you’ve repaid the principal and any due interest, you can close the loan at any time without extra charges. After repayment, you can keep the credit limit and withdraw funds as needed, incurring interest only on withdrawals. Alternatively, you can unpledge the collateralised mutual funds after loan closure, enabling you to redeem or sell them. Below is a table detailing additional fees, charges, and interest rates for HDFC loans against mutual funds on smallcase.
| Fees & Charges | Details |
| Processing Fee | ₹999 or 1% of loan amount, whichever is higher, up to a maximum of ₹4999 (plus GST) |
| Late Payment Interest | Penal Interest: 2% per month |
| Bounce Charges | ₹1200 per bounce |
| Annual Renewal Charges | None |
| Loan Top-Up Charges | None |
| Part-Prepayment Charges | None |
| Foreclosure Charges | None |
| Mandate Inactive Charges | None |
| Mandate Verification | Charged by your bank (typically between ₹0 to ₹150) |
| Lien Removal Charges | If requested after taking loan: None If loan is canceled before disbursement: Actual processing fee applicable |
| Security Swap Charges | None |
| Collection/Legal Charges | In case of default: Actuals |
Note: This information was updated on April 18th. For the latest updates on interest rates, fees, and charges, visit the smallcase help centre for LAMF.
To Wrap It Up…
In summary, securing a loan against mutual funds with HDFC at smallcase can offer a practical and efficient way to access funds without selling off investments. smallcase’s straightforward application process and digitally simplified interface make it a convenient option for individuals looking to address immediate financial needs. Whether it’s for unexpected expenses or capitalising on new opportunities, HDFC’s loan against mutual funds at smallcase provides a reliable solution to meet financial objectives while preserving investments for the long term.
Frequently Asked Questions (FAQs)
Absolutely. You can consider smallcase for this! Just import your HDFC fund holdings onto smallcase and check your maximum eligible loan amount and apply for a loan right away. You can also get a LAMF against any other MF holdings you may have, with smallcase in just under 3 hours!
In smallcase, your credit limit mirrors the maximum loan achievable with your eligible mutual funds. It’s calculated by applying a percentage to the value of your selected mutual funds, which serve as collateral. Equity mutual funds offer a 45% lending percentage, while debt mutual funds provide an 75% lending percentage at smallcase.
The default tenure of the loan against HDFC mutual funds at smallcase is 36 months. However, you can choose to close the loan early without any foreclosure charges. The loan tenure can also be extended beyond 36 months.
No. There are no lien removal charges if you request one after taking out the HDFC loan against mutual funds.
The default tenure of the loan repayment against HDFC mutual funds at smallcase is 36 months.
Note: This information regarding interest rates was updated on April 18th. For the latest updates on interest rates, fees, and charges, visit the smallcase help centre for LAMF.
