Loan Against Assets in 2025: Smart Ways to Borrow Using Your Financial Investments

Loans against assets represent a promising avenue in an ever-fluid economic environment full of opportunities. People and enterprises find themselves hanging onto the thread of liquidity. It is not always a wise decision to encroach on your long-term investments, whether due to a business opportunity, an emergency, or simply as a diversification of one's portfolio. A loan against assets is gaining increasing attention as a means of converting assets into cash without the need to sell them through financial instruments.

From loans against mutual funds to borrowing against shares, fixed deposits, and even ULIPs, the asset-backed lending industry in India has evolved significantly. This blog explores which financial assets are eligible for a loan, how the process works, and whether it's a good option for your unique financial goals.

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What Is a Loan Against Assets and How Does It Work?

A loan against assets is a type of secured loan where the borrower pledges financial instruments as collateral to receive funds from a lender. The value of your investment determines the loan-to-value ratio (LTV), and the lender places a lien on your assets until the loan is repaid.

These loans are widely used because they offer:

• Quick processing and disbursement
• Lower interest rates compared to personal loans
• No need to liquidate long-term investments

You're leveraging your existing portfolio to gain immediate financial access, making it a smart way to handle both planned and unplanned expenses.

Popular Financial Instruments You Can Pledge

Let’s take a closer look at financial assets eligible for loans and how they function in the borrowing ecosystem:

1. Loan Against Securities

This includes shares, exchange-traded funds (ETFs), and non-convertible debentures (NCDs). You can pledge them through your demat account holdings, and banks or NBFCs will offer a loan of up to 50–70% of their market value. These loans are ideal for short-term funding and often come with an overdraft facility.

2. Loan Against Mutual Funds

Many lenders accept both equity and hybrid mutual funds. You don’t need to redeem your units; instead, you authorise a lien in favour of the lender. Loans are processed quickly and offer flexible terms, including tenure and repayment options. Wondering how to get a loan against mutual funds? Most banks now provide app-based processes for this in 2025.

3. Loan Against Fixed Deposits (FDs)

This is a classic and low-risk option. You can avail up to 90% of your FD’s value with interest rates typically 1–2% higher than the deposit rate. The process to get a loan against fixed deposits is straightforward and ideal for conservative investors needing instant liquidity without breaking the FD.

4. Loan Against Insurance Policies

Specific policies, such as endowment policies, ULIPs, and annuity plans, are accepted as collateral. If you’re wondering, Can I take a loan against the insurance policy, the answer is yes, provided the policy has a surrender value.

5. Loan Against Government Instruments

Secure and stable, these include:

• Loan against NSC
• Loan against KVP
• Loan against PPF (Public Provident Fund) – subject to PPF loan eligibility norms
• Loan against sovereign gold bonds
• Loan against digital gold

Risk-averse borrowers commonly use them and come with relatively lower interest rates.

6. Loan Against Structured or Hybrid Products

New-age investors can also avail themselves of loans against structured investment products, long-term investments, or capital market instruments, depending on the lender’s risk appetite.

Benefits of Borrowing Against Investments

Borrowing rather than redeeming allows you to maintain your investment portfolio diversification while gaining liquidity. Here's why more people are choosing to borrow against investments:

Preserves wealth accumulation: 
No need to break compounding

Tax advantages: 
Reduces the need to realise capital gains

Faster access: 
Many lenders offer instant loan against portfolio options

Flexible repayment: 
Options like part prepayment or overdraft-linked repayments

Additionally, many now opt for this option over a personal loan, which raises the question: Is a loan against insurance a better choice than a personal loan? In many cases, yes, especially when cost and tenure flexibility are essential considerations.

Key Factors to Consider Before Applying

Before you jump in, evaluate these:

Collateral value: 
Market fluctuations can impact pledged assets

Loan-to-value ratio (LTV): 
Varies by asset class.

Charges applicable to loans against investments
 Include Processing fees, documentation charges, and other related expenses.

Interest rates on loans against financial assets: 
Generally 9–13%, depending on asset type

Risk of asset-backed borrowing: 
A market downturn can prompt a margin call

Repayment flexibility: 
Can I repay the loan against shares in parts? Most lenders now allow partial repayments.

You’ll also need to review the documentation; each lender may require different papers depending on the asset and amount. For example, if you're wondering what documents are required for a loan against securities, you’ll typically need to provide identity proof, demat account details, and a signed lien form.

Final Thoughts: Is a Loan Against Assets the Right Move?

If you’re looking for a low-interest loan against securities, mutual funds, or other instruments, without disrupting your investments, then a loan against assets could be an ideal fit. It offers better control, lower costs, and preserves your long-term plans.

That said, consider your financial objective carefully. Are you seeking short-term liquidity or funding for your business? A loan against financial assets for business purposes can help avoid equity dilution. Need emergency funds? An emergency loan against assets can be obtained more quickly than through traditional routes.