Partial Repayment and Release of Units in LAMF

What is Partial Repayment in LAMF?

Partial repayment in Loan Against Mutual Funds (LAMF) refers to paying back a portion of your outstanding loan instead of the full amount. This helps reduce your loan balance and improves your loan-to-value (LTV) ratio.

How Unit Release Works

When you make a partial repayment, lenders may allow you to release some of the pledged mutual fund units. The extent of release depends on your updated LTV and lender policies.

Once your loan exposure reduces, excess collateral (mutual fund units) can be unpledged and become available for redemption or switching.

Why Partial Repayment is Beneficial

Partial repayment helps reduce interest costs since interest is charged only on the outstanding amount. It also lowers your risk of margin calls by improving your LTV ratio.

Additionally, releasing units gives you more flexibility to manage your investments independently.

When Can You Request Unit Release?

You can typically request a release when:

• Your LTV is well below the threshold
• You have repaid a significant portion of the loan
• Your portfolio value has increased

Process of Releasing Units

The process is usually digital. After repayment, you can request unit release through your lender’s platform. The lien is adjusted via RTAs like CAMS or KFintech, and the released units become free for use.

Things to Consider

Releasing too many units may reduce your collateral buffer. It is important to maintain a safe LTV to avoid future margin calls.

Also, ensure that repayment aligns with your financial goals and liquidity needs.

Final Thought

Partial repayment and unit release in LAMF provide flexibility and control over your investments. Managing this strategically can help you reduce costs and maintain financial stability.

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.