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Can I Get a Loan Against My Financial Assets?

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Highlights

  • Contemplating for a loan against a financial asset but don't know how it will pan out for you?
  • Read this post that contains details of loans against assets such as home, life insurance, mutual funds, shares, etc.

Financial assets are instruments that help you meet your personal and business needs. These assets can be your home, gold life insurance, mutual funds, shares, bonds, fixed deposits, national savings certificate, etc. You can get a loan against any of these financial instruments to fulfill your needs. While loans granted against your home asset are termed as loan against property, loans given on behalf of others come under the category of loan against securities. How will the loan against each of these assets work to your advantage? We will detail you all, so keep reading!

Loan Against Property

This loan can be granted to the tune of 60%-80% of the property value. It can be given for any personal or business purposes. Often people arrange funds against their homes for purposes such as education of their children. The interest rates are comparatively lower than in the case of personal loans. The disbursal of loan is also contingent on paying the applicable processing and doing several other formalities like document submission.

LendersInterest Rate (In Per Annum)Max. Loan QuantumMax. TenureProcessing Fee
State Bank of India (SBI)9.20%-10.75%Upto INR 7.5 Cr, subject to 60%-65% of the property valueUpto 15 Years1% of the loan amount, upto a maximum of INR 50,000
HDFC Limited9.40%-11.50%Upto 50%-60% of the market value of the propertyUpto 15 YearsUpto 1.50% of the loan amount, subject to a minimum of INR 4,500
ICICI Bank10.30%-10.40%Upto INR 5 Cr, subject to a cap at upto 70% of the property valueUpto 15 Years1% of the loan amount
Axis Bank11.25%-11.75%Upto INR 5 CrUpto 20 YearsAs applicable
PNB Housing Finance10.25%-11%Upto 60% of the market value of the propertyUpto 20 Years1% of the loan amount
LIC Housing Finance11.30% - 11.80%Upto INR 50 LakhUpto 15 Years1% of the loan amount
Bank of Baroda8.45%-13.25%Upto INR 10 CrUpto 15 Years1% of the loan amount

Loan Against Mutual Funds

Loans against mutual funds can be granted in line with the value of your investment. Plus, lenders also consider the frequency in the up and down of the investment value. The loan against Equity mutual funds, which invest a massive proportion of around 80%-90% in the high-risk, high-return proposition of equities, can be granted upto 50% of the investment value. Whereas, debt funds, which invest heavily in fixed income instruments, can garner as much as 80% loan on the investment value. While some banks disburse term loans, some provide an overdraft facility against mutual funds. Term loans will be paid via the EMIs. Whereas, with an overdraft facility, the amount will be sanctioned and get deposited to a savings or current account. The interest will apply only to the utilized amount and get calculated on the daily outstanding balance.

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LendersInterest Rate (In Per Annum)Max. Loan QuantumProcessing Fee
State Bank of India (SBI)9.75%Upto INR 20 Lakh when offered against equity/hybrid funds

Upto INR 5 Cr when offered against debt funds/fixed maturity plans
0.75% of the loan amount
HDFC BankDepends on the movement of NAVUpto 50% of the NAV in case of loans against equity funds

Upto 80% of the NAV in case of loans against debt mutual funds/FMPs
1% of the loan amount
ICICI BankDepends on the movement of NAVUpto 50% of the NAV, subject to a cap of INR 20 Lakh0.50% of the loan amount
Kotak Mahindra BankDepends on the movement of NAVUpto 50%of the NAV in case of loans granted against equity mutual funds

Upto 85% of the NAV in case of loans granted against debt mutual funds
Upto 2% of the loan amount
Axis Bank10.50%-12.75%Upto 85% of the market valueAs applicable

Loan Against Shares

Stock markets are much more volatile than mutual funds because of the lack of diversification in the former. The loan quantum can be upto 50% of the present market value of the stock. While some banks disburse term loans, some provide an overdraft facility against shares. Term loans will be paid via the EMIs. Whereas, with an overdraft facility, the amount will be sanctioned and get deposited to a savings or current account. The interest will apply only to the utilized amount and get calculated on the daily outstanding balance.

LendersInterest Rate (In Per Annum)Max. Loan QuantumProcessing Fee
State Bank of India (SBI)9.75%Upto INR 20 Lakh, subject to a cap of 50% of the market value of shares0.75% of the loan amount
HDFC BankDepends on the movement of stock pricesUpto 50% of the present value of shares1% of the loan amount
ICICI BankDepends on the movement of stock pricesUpto 50% of the value of shares, subject to a cap of INR 20 Lakh0.50% of the loan amount
Kotak Mahindra BankDepends on the movement of stock pricesUpto 50% of the current market value of sharesUpto 2% of the loan amount
Axis Bank10.50%-12.75%Upto 85% of the market valueAs applicable

Loan Against Bonds

Bonds are issued from companies to raise capital from the public. These are relatively safer instruments compared to equities, so banks can disburse more loans when you look to get them against bonds. Generally, banks disburse loans against gold bonds, gold deposit certificates, etc. While some banks disburse term loans, some provide an overdraft facility against mutual funds. Term loans will be paid via the EMIs. Whereas, with an overdraft facility, the amount will be sanctioned and get deposited to a savings or current account. The interest will apply only to the utilized amount and get calculated on the daily outstanding balance.

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LendersInterest Rate (In Per Annum)Max. Loan QuantumProcessing Fee
State Bank of India (SBI)9.90%Upto INR 20 Lakh, subject to a cap of 65% of the market value of sovereign gold bonds0.50% of the loan amount
HDFC Bank (Overdraft FacilityAs applicableUpto 70% of the present value of gold deposit certificates1% of the loan amount
ICICI Bank (Overdraft Facility)As applicableUpto 5 Crore0.50% of the loan amount
Kotak Mahindra Bank9.25%-13%20 Lakh, subject to a cap of 85% of the face valueUpto 2% of the loan amount
Bank of Baroda11.90%Upto 80%-85% of the face valueINR 500

Loan Against Fixed Deposits

You can get a loan against fixed deposits, which can be opened for a minimum of 7 days to a maximum of 10 years across banks, upto 80%-90% of the deposit amount. The interest rate on such loans can be 1%-2% above the relative time deposit rate.

LendersMax. Loan QuantumMax. Tenure
SBIUpto 90% of the time value of your FDUpto 5 Years
Bank of BarodaUpto 95% of the time value of your Fixed Deposit (Principal + Interest0Upto 5 Years
ICICI BankUpto INR 3 CroreUpto 7 Years
HDFC BankUpto 90% of the fixed deposit amountAs applicable
Axis BankUpto 85% of the fixed deposit valueAs applicable

Loan Against Life Insurance Policy

Banks grant loans against life insurance policies at a certain percentage of the surrender value. The loan is not applicable to term plans, rather it is given on traditional plans. While some banks disburse term loans, some provide an overdraft facility against insurance plans. Term loans will be paid via the EMIs. Whereas, with an overdraft facility, the amount will be sanctioned and get deposited to a savings or current account. The interest will apply only to the utilized amount and get calculated on the daily outstanding balance.

LendersInterest Rate (In Per Annum)Max. Loan QuantumMax. TenureProcessing Fee
Bank of Baroda10.75%-11.25%Upto 80%-85% of the surrender value of the insurance policyUpto 5 years, subject to the maturity of the policyINR 500
ICICI BankAs applicableUpto INR 5 CroreSubject to the maturity of the policy0.50% of the loan amount
HDFC BankAs applicableUpto 80% of the surrender value of the insurance policySubject to the maturity of the policyUpto 1% of the loan amount
Kotak Mahindra Bank9.25%-13%Upto 90% of the surrender value of the insurance policySubject to the maturity of the policyUpto 2% of the loan amount
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Loan Against National Savings Certificate

National Savings Certificate (NSC) is a postal office product that not only helps you accumulate funds for your future but also avail loans against the same. The rate of interest, which varies from time to time, presently stands at 6.80% per annum. The loan rates can be a couple of percent above the interest rate offered on NSC.

LendersInterest Rate (In Per Annum)Max. Loan QuantumMax. TenureProcessing Fee
Bank of Baroda11.90% or 0.50% above NSC rate, whichever is greaterUpto 80%-85% of the face valueSubject to the maturity of the policyINR 500
Punjab National Bank10.75%Upto 80%-85% of the face valueSubject to the maturity of the policyAs applicable
HDFC BankAs applicableUpto 70% of the present valueSubject to the maturity of the policyUpto 1% of the loan amount

Gold Loan

The yellow metal gold can help you by securing funds when you need them the most. Banks disburse loans against gold ornaments to the tune of 80%-90% of the value of the ornaments. As far as repaying the gold loan is concerned, you can do it either via EMis or a bulk payment using the bullet repayment method. With the bullet method, you need to pay the principal amount as well as the accrued interest on or before the expiry of the loan tenure.

LendersInterest Rate (In Per Annum)Max. Loan QuantumMax. TenureProcessing Fee
State Bank of India (SBI)7.50%INR 20 Lakh, upto 65%-75% of the value of gold ornaments1-3 Years0.50% of the loan amount
Muthoot Finance12.00% - 27.00%No maximum limit1 YearUpto 1% of the loan amount
Manappuram Finance12.00% - 29.00%Upto 1.5 Crore3 MonthsAs applicable
Bank of Baroda9.75%Upto INR 25 Lakh1 Year0.50% of the loan amount, subject to a maximum of INR 3,500
ICICI Bank11.00% OnwardsUpto INR 15 Lakh1 Year1% of the loan amount
HDFC Bank10.05% - 17.95%From 10,000 onward2 Years1.50% of the loan amount
Axis Bank15.00%Upto INR 20 Lakh3 Years1% of the loan amount
Kotak Mahindra Bank10.50% - 24.00%Upto 65%-75% of the value of gold ornaments4 YearsUpto 2% of the loan amount

Note – The processing fee will also include 18% Goods and Services Tax (GST)

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Fullerton India14.00% - 33.00%
HDFC Bank10.75% - 21.45%
ICICI Bank10.75% - 18.49%
IndusInd Bank11.25%
Kotak Bank10.99% - 20.99%
RBL17.50% - 24.00%
Standard Chartered Bank11.00% - 15.00%
Tata Capital10.99% - 18.00%
Home Loan Interest Rates August 2020
Axis Bank7.75% - 8.55%
Bank of Baroda7.00% - 8.40%
Citibank8.20%
HDFC6.95% - 8.00%
ICICI Bank6.95% - 8.05%
Indiabulls Housing Finance Limited8.80% - 11.05%
Kotak Bank7.20% - 9.30%
LIC Housing6.90% - 7.90%
Piramal Capital & Housing Finance9.00% - 9.10%
PNB Housing Finance8.60% - 9.45%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI6.95% - 7.60%
Tata Capital9.20% - 9.35%