LAMF Tenure Options

What Are LAMF Tenure Options?

Loan Against Mutual Funds (LAMF) offers flexible tenure options designed to suit short-to-medium-term liquidity needs. Unlike traditional loans with fixed EMIs and rigid repayment schedules, LAMF typically operates as a credit line or overdraft facility. This means borrowers can use funds as needed and repay at their own pace within the approved tenure.

Typical Tenure Ranges in India

Most lenders offer LAMF tenures ranging from 12 months to 36 months, with the possibility of renewal upon completion. The tenure is not always structured as a fixed repayment schedule. Instead, borrowers are required to service interest regularly while maintaining the required loan-to-value (LTV) ratio.

Overdraft Model vs Fixed Tenure

In an overdraft-based LAMF, you are approved for a credit limit and can withdraw funds as required. Interest is charged only on the amount utilized and for the duration it is used. This provides flexibility compared to fixed-tenure loans, where interest is calculated on the full disbursed amount.

Choosing the Right Tenure

Selecting the right tenure depends on your financial requirement. For short-term needs like emergency expenses or temporary cash flow gaps, a shorter tenure is ideal. For slightly longer needs such as business funding or planned expenses, a longer tenure with flexible repayment may be more suitable.

Renewal and Closure

LAMF tenures can typically be renewed at the end of the term, subject to lender policies and portfolio valuation. Once the outstanding loan is fully repaid, the lien on your mutual fund units is removed, restoring full control over your investments.

Why Tenure Matters in Financial Planning

Understanding tenure options helps you manage borrowing costs effectively. A well-chosen tenure ensures you maintain liquidity without overextending your financial commitments while keeping your investments intact.

Loan Against Mutual Fund is subject to applicable interest rates and credit assessment. Mutual fund units pledged as collateral are subject to market risks. Please read all loan-related documents carefully.