You may need to take a loan at some point in your financial journey. It could be during an emergency, such as the hospitalization of a family member. Alternatively, it could be taken to fund an important expense such as medical emergencies or your child’s higher education. During such times, taking a Personal Loan is not the only option for you.
You can also take a Loan Against Securities within your investment portfolio. This blog explains the benefits of taking a Loan Against Securities so you can make an informed decision.
Understanding Loans A gainst Securities
A Loan Against Securities is a lending product offered by banks. You can pledge specific types of assets as collateral, such as shares, Mutual Funds, life insurance, etc. against the desired loan amount.
This is an alternative product to a Personal Loan. In both cases, the loan amount can go towards any personal expense - from a medical emergency to purchasing a personal product of large ticket sizes. A Loan Against Securities comes with several benefits.
Pros of taking a Loan Against Securities
- One of the most attractive advantages is that the Loans Against Securities interest rates tend to be lower than that for Personal Loans.
- The digital application process for Loans Against Securities does not require any documents.
- The loan against securities process is offered with Overdraft facility in which you only pay interest on the amount you utilize. Hence it is now possible to take a loan of larger amount without worrying to pay interest over all the amounts.
Types of Loans Against Securities:
Loan Against life insurance
- This is a product where you pledge your life insurance policy as collateral.
- The amount you are allowed to borrow may vary between lenders. Loan against Life insurance can be availed physically at any Axis Bank Branch near you.
- You will not need to liquidate your life insurance policy to help fund your expenses. Instead, the bank will extend an overdraft to up to 75% of the value of the security.
- If you want to take a loan against insurance, you must check if your life insurance provider is registered with the bank.
- If the policy is jointly held, then the second policyholder’s signature will also be needed for the loan documents.
Eligibility: You must be a resident of India and be at least 18 years of age. You should be able to pledge a life insurance policy registered in your name.
Also Read: [ Experience swift and seamless procedures for Loan Against Securities]
Loan Against Shares:
- This is a product where you pledge your shares as collateral.
- The amount you are allowed to borrow may vary between lenders. Typically, a credible bank lender allows you to take a loan amount of up to 50% of the value of the shares.
- You will not need to liquidate your shares to help fund your expenses. Instead, the bank will extend an overdraft to up to 50% of the value of the security.
- Shareholders taking a Loan Against Securities can continue to enjoy benefits such as dividends on the shares.
Eligibility: You can be a resident Indian or a Non-Resident Indian above the age of 18 years. You must be able to pledge shares held in your name.
The takeaway
Axis Bank customers can seamlessly take a Loan Against Securities such as life insurance, shares, bonds and Mutual Funds to meet their loan needs. . You can avail of loan amounts based on the type of security pledged. Securities such as shares can be pledged digitally. To take a Loan Against life insurance, visit the nearest Axis Bank branch and get your loan processed.
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
