Need Funds Without Selling Your Investments? Get Loans Against FD, Gold, Mutual Funds, and Shares at Low Interest

If you need extra funds but don't want to sell your investments like mutual funds, stocks, fixed deposits (FDs), or gold, a collateral loan can be a smart and economical choice. By pledging your existing investments, you can secure a loan while continuing to benefit from asset ownership. Banks and NBFCs offer loans against these financial instruments with attractive interest rates and varying loan-to-value (LTV) ratios.

Let’s explore which collateral option could work best for you.

1. Loan Against Fixed Deposit (FD)

A loan against an FD is one of the safest options available. Most banks allow borrowers to avail up to 90–95% of the FD's value. The process is simple, especially if the FD is with the same lender, which often means minimal documentation.

• Loan-to-Value (LTV) Ratio: 90%–95%

• Interest Rate: Typically 1%–2% above the FD interest rate

• Processing Time: Fast and hassle-free

• Best For: Those seeking low-risk loans with steady interest costs

2. Loan Against Gold

Gold loans are highly popular in India, thanks to their fast processing times and easy availability. You can borrow up to 75% of your gold’s market value. This type of loan is processed quickly and requires minimal documentation.

• LTV Ratio: Up to 75%

• Interest Rate: Varies between 9% and 29% depending on lender and tenure

• Ideal For: Quick access to funds without income proof or credit checks

• Note: The purity and weight of the gold significantly impact loan value

3. Loan Against Shares

If you own stocks of listed companies, you may be eligible for a loan by pledging them. However, not all shares are accepted—only select blue-chip stocks qualify.

• LTV Ratio: Up to 50%

• Interest Rate: 10%–13%

• Key Point: The volatility of shares increases risk, leading to stricter loan terms

• Best Suited For: Experienced investors who want to unlock liquidity without exiting the market

4. Loan Against Mutual Funds

Mutual funds are another viable asset to leverage for loans. Depending on the type of fund—equity or debt—the amount you can borrow varies.

• Equity Mutual Funds LTV: 50%–70%

• Debt Mutual Funds LTV: 80%–90%

• Processing Time: 1–2 business days

• Interest Rate: Competitive and lender-dependent

• Additional Benefit: Investors retain ownership and continue receiving dividends or interest

Key Benefits of Collateral Loans

• No Need to Liquidate Assets: You retain ownership of your investments

• Fast Disbursement: Especially in the case of gold, FDs, and mutual funds

• Flexible Repayment: Often comes with easy EMI or bullet repayment options

• Lower Interest Rates: Compared to unsecured personal loans

Points to Remember

• Always compare LTV ratios and interest rates across lenders

• Review the terms carefully, especially regarding asset seizure in case of default

• Loans against volatile assets (like shares) carry higher risk and may require top-ups or margin calls

Conclusion

Loans against financial assets like FDs, gold, shares, and mutual funds are becoming increasingly popular for individuals seeking quick liquidity without losing out on investment benefits. By understanding the risks and loan conditions, you can make a well-informed decision that supports your financial goals without disrupting your portfolio.