Which Loan Against Security option is suitable for you?

4 MinsDec 06, 2022

Medical emergencies are one of the most unavoidable and unpredictable occurrences in ones life.

Which Loan Against Security option is suitable for you?

Even though you may plan for certain situations, there could be instances that your emergency fund may not be enough to cover, say, hospital bills. So, what do you do in such a situation?

The need for instant cash is undeniable, especially in a world full of uncertainties, but sadly it is not always readily available. No friends or family can help you with instant cash.

Axis Bank can help you during these challenging times. The solution is a Loan Against Securities (LAS).

With Loan Against Securities, you can easily get instant cash by pledging your investments. A good CIBIL score works in your favour. The best feature of LAS is you can avail funds without selling your investments, using Mobile banking/Internet banking from the comfort of your home instantly.

What kinds of securities can be used as collateral?

Meet your immediate cash needs without selling your shares. The stock market is volatile, but you can avail a loan against shares. Axis Bank provides a maximum of 50% -60%* loan on the market value of securities available.

2. Equity mutual funds
A better alternative to selling off your mutual funds. Mutual funds are market dependent and give profit or loss as per the same. When you sell your mutual fund at the current market rate for an emergency, you lose the probability of making future profits. Axis Bank provides loans on equity mutual funds that can be taken up to 70% of the current investment value.

3. Debt mutual funds
Save your mutual funds portfolio even during a period of crisis. Axis bank offers a loan against debt mutual funds. The loan amount depends on the fund units available in your folio. For debt mutual funds, the amount can go up to 80% of your current units.

4. Bonds
Your overall eligibility and investment value can help you get through unexpected situations. You can easily avail a loan on a bond’s 80% market value.

5. LIC policy
LIC policy can protect your loved ones after your demise and help you in times of need. Axis bank provides loans against LIC policy. A loan of approximately 70–80% of the surrender value is possible. For taking loan against LIC policy, kindly visit your nearest branch to know further details.
With a LAS, one can use the borrowed money for any reason. It can be used for anything from a vacation to paying bills at a hospital. And the best part is that the interest charged is not on the borrowed amount, but only on amount withdrawn and for the period of utilisation.

Is there a list of stocks/MFs/life insurance policies eligible to be used as collateral? 

Yes, there is a long list of all scrips for stocks and MFs, but they are dynamic. Stocks mutual funds are market-dependent; hence the value of these securities fluctuates. Any kind of stock or mutual fund is eligible for a loan.

To avail loan against policy, please visit your nearest branch, as this facility is not digital at this point of time. However, the term life policy has a time limit; hence you cannot borrow against it. If the term can be converted to a permanent one, the value of the policy increases, and a reasonable loan amount can be received against it. 

How much loan amount can you get against different types of securities?

For shares, equity mutual funds, and bonds, the minimum amount is Rs. 25,000, and the maximum is Rs. 20 lakh. For debt mutual funds, it is between Rs. 1 lakh to Rs. 1 crore. 

The positive side of a loan against securities is that you don’t have to sell your investments. With Axis Bank, you can easily avail of a loan at your fingertips at an affordable interest rate. We give you the freedom to decide your loan repayment schedule. Live a stress-free life with 24*7 LAS by Axis Bank!

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.