How much can you borrow with a Loan Against Securities? Find out now
If you are looking for a convenient way to raise funds without liquidating your valuable investments, a Loan Against Securities is the perfect solution. Many individuals and businesses require immediate liquidity for various purposes, such as funding a child’s education, managing business working capital, or covering unexpected expenses.
A Loan Against Securities lets you unlock the value of your investments while you earn returns on them. But how much can you borrow with a Loan Against Securities?
Overview of Loan Against Securities
A Loan Against Securities is a Secured Loan where you pledge your financial investments, such as shares, Mutual Funds, Bonds, or other approved securities, as collateral. In return, you get access to a line of credit or a Term Loan without selling your holdings. Lenders offer this facility to help you meet short-term funding needs without disturbing your investment portfolio. It is an efficient way to meet urgent expenses while maintaining long-term investment.
What is the Loan amount you can borrow?
The amount you can borrow under a Loan Against Securities depends on the type and value of the securities you pledge. Lenders determine your Loan amount based on the market value of your securities and the applicable Loan-to-Value ratio. Here is how it works:
LTV ratio
This is the percentage of the market value of your securities that the lender is willing to offer as a Loan. For example, SMFG India Credit may offer up to 50% to 70% of the market value, depending on the type of security.
Security type
Different securities have different risk profiles. Shares are generally more volatile compared to debt instruments, such as Bonds or Mutual Funds with low-risk profiles. Therefore, the LTV for shares may be lower than that for debt securities.
Market conditions
Since the value of your pledged securities fluctuates daily based on market performance, lenders periodically reassess their value. Hence, a margin is maintained to protect against sudden market dips.
Your profile
Your credit profile, repayment capacity, and history with the lender also influence the final Loan limit offered.
Benefits of a Loan Against Securities
Lenders provide flexible Loan Against Securities solutions with:
Better interest rates: You get competitive rates to ensure you pay less while your investments keep working for you.
Continued ownership: You retain ownership and receive dividends, bonuses, and rights issues.
Flexible repayment tenure: Interest is charged only on the amount utilised, and you can repay as per your convenience within the agreed tenure.
Quick approval: Minimal paperwork is involved, and approvals are processed more quickly for immediate liquidity.
Conclusion
A Loan Against Securities is a smart option if you want to tap into your investments for immediate needs without having to liquidate them. By understanding the LTV ratios and the securities accepted, you can estimate how much you are eligible to borrow and plan your finances better. You benefit from a seamless process, attractive rates, and the peace of mind of staying invested while accessing funds. A Loan Against Securities is the solution you have been seeking.
