A loan against security (LAS) is a secured loan for which you pledge your stock portfolio as collateral. In most cases, the borrowers get 60% of the portfolio’s value as their loan amount. Therefore, if the stock market is on the rise, then the portfolio value will be higher. Hence, an increased loan amount. Furthermore, while the portfolio becomes collateral, the investor will still receive the benefits of their investments in the meanwhile. Some benefits of a loan against security include the following.

• Overdraft Facility 

Loans against securities are offered in an overdraft facility. An overdraft facility means that after evaluating the portfolio, 40% to 60% of the value is deposited into an overdraft account. The borrower can use this when they deem it necessary, and the interest is only charged on the amount they use.

• Revaluation

The lender periodically revaluates your portfolio since the stock market is ever-changing. When the stock market is on the rise, there are much fewer chances of compensating lower than the loan’s value. 

• Interest Rates 

A loan against securities’ interest rate is relatively lower since it is secured. When the stock market is on the rise, your ability to repay the loan with interest is higher, as you are reaping more benefits from the investments in the portfolio. 

Lenders specialises in secured loans like these, offering long tenures and competitive interest rates for your maximum benefit. Availability of this loan gives you flexibility in repayment so you do not feel financially burdened at any point!

Additional Read: 5 reasons why you should go for a Loan Against Securities