Are you considering leveraging your mutual fund investments for a loan? Do you want to calculate how much loan you can get against your mutual funds? Then, a Loan Against Mutual Funds Calculator is the perfect solution for you. This invaluable tool helps investors determine the loan amount they can avail of, the applicable interest rate, and the repayment terms. In this article, we will be studying everything about the loan against mutual funds calculator and how it can help you.

What is a Loan Against Mutual Funds Calculator?

This unique calculator is a simple digital tool that calculates the maximum loan amount you can secure against the units held by you. Generally, you need to enter details like the name of the mutual fund and the number of units to start the calculation. 

The loan against mutual funds calculator tool makes use of the total value of your mutual funds. This way, you can easily calculate the applicable interest rate, the amount of eligible loans, and payable monthly interest.

Directions of Using a Loan Against Mutual Funds Calculator

• If you check through the lender’s website portals, you can easily find one. Here, we will show you a step-by-step guide to using this calculator. Firstly, select the fund name from the dropdown list. Then, enter the number of units you have. In the next step, choose the ‘Add’ button to see the loan amount, interest rate, and payable interest for a month.
• If you have invested in multiple schemes, you can keep adding them to the list to calculate your total amount and burden of interest. Also, you can select the ‘Delete’ button to remove an Mutual Funds from the list. This way, you can run multiple simulations to guess your loan amount and interest charges.
• You can see your loan against a mutual fund as a bank overdraft limit, where you have only to pay interest on the amount you withdraw. Your interest will be calculated daily and deducted on a specific date every month.
• If you want to gauge your interest, then you should calculate from the above calculator

Formula to calculate loan against Mutual Fund -  Daily interest = P*(R/365)

Monthly interest = Daily interest*N

P = Principal outstanding on the day

R = Yearly rate of interest

N = Number of days in a month

You can also make partial payments if you want to lessen your principal outstanding. Thus, you can reduce your interest.

Features of a Loan Against Mutual Funds Calculator

To understand how to get your borrowings in your money crises, you need to know all its functions. 

Most of the time, you will find a preloaded list of accessible schemes in the dropdown menu. This is the approved list of the lenders from whom you can secure a loan. In other words, if it is not listed on the calculator, the lender may restrict your application.

Also, it sets the actual amount of your units or net asset value per the NAV. If you have funds with a high value, this can help you get a higher loan amount. However, the eligible loan will also depend on the LTV ratio. It is the loan-to-value ratio, which is the maximum proportion of an asset’s value you can secure. Lenders can give you up to 80% of the NAV for debt mutual funds. However, the LTV cap is marked at 50% of the asset’s value for equity since they are more volatile. They may vary from one lender to the next.

Generally, most calculators display the payable interest based on the theory of 100% fund usage in 12 months. However, when you apply for it, the interest charges will only be calculated based on the principal amount used and the duration used. The number of your pledging units will also affect the eligible loan amount and its charges. Also, this thing will automatically increase the sanctionable money. However, lenders also have loan caps on LAMFs at minimum and maximum rates. Most of them can give up to Rs. 20 Lakhs on equity and up to Rs. 1 Crore on debt.

Conclusion

In conclusion, we hope you have understood the basic concept of this unique tool. Most people who want to learn how to get a loan against mutual funds should know how to use an LAMF calculator. This incredible device helps you calculate your amount and decide if it serves the money crisis. Thus, if the calculation fails to satisfy you, you can always choose alternative credit sources to secure a higher amount.