Things To Know About Loan Against Securities

Financial needs crop up unexpectedly. Hence, it is impossible to prepare for them. In such instances, Loans come to the rescue. Different Loan types cater to varied needs. Most come with competitive rates and a collateral requirement. However, not everyone feels excited about pledging their valuable possessions.

To aid this concern, there is an alternative. It is called Loan Against Securities. Banks offer this credit option to investors against the securities they own. The Loan amount gets sanctioned as an overdraft facility while you continue to enjoy the investment benefits. This makes it the perfect financing option for an investor. If it seems like an appropriate option for you, ensure to consider these factors before applying:

Application

You have the convenience to apply directly via the lender’s website. Here, you get a digital form that asks for general information like your name, address, age, guarantor details, income, and securities you wish to pledge. After this, you get taken to the documentation stage, where you upload the supporting paperwork. You may also choose to apply offline by visiting the bank branch. It involves a similar process but physically.

Eligibility criteria

You should be between 18-65 years. Besides, your application gets considered only when the securities you pledge are against your name. They should also belong to you as an individual instead of your company. The standard security types accepted are Demat shares, Non-Convertible Debentures, Mutual Funds, Bonds and Government schemes, etc. The Loan Against Property interest rates gets determined based on their market value.

Documentation

Applying for the Loan involves fulfilling minimal paperwork. However, submit them after thorough scrutiny to avoid hiccups during verification. Check if the KYC documents, security papers, Demat Account details, and income statements are updated. Also, the information on the application form must match with the document details. Make sure to examine the same and keep them ready before applying.

Investment portfolio

Your securities are the base that decides the Loan amount. Hence, have a strong portfolio with financial viability. Lenders assess the same for judging your eligibility and sanctioning the Loan. Going through this before they enable you to boost your application. Make sure your portfolio gets diversified and meets the set requirements. You find the details regarding this on the lender’s websites.

Features

The Loan Against Securities is relatively simple and more accessible compared to other Loans. It also comes with a reasonable interest rate. Also, the Loan amount gets disbursed based on the cash value of your shares. However, the typical borrowable amount ranges between Rs. 1 lakh to Rs. 20 lakh.

Lenders also levy charges for processing and other needs. The details regarding the same get mentioned in the agreement. Hence, check the same for full disclosure.

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Created on Oct 11th 2021 08:34. Viewed 298 times.

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