Real Estate Down Payment Crisis? Use LAMF Without Killing Your SIPs

Residential real estate across India’s top cities has entered a phase where time has become more expensive than money. Prices are no longer rising gradually—they are repricing faster than most salaried incomes can adjust.

Industry transaction data and broker surveys through 2024–25 show that under-construction premium housing has seen sharp appreciation in key markets. Mumbai has led this trend, with price increases in the high single digits annually, while Bengaluru has seen strong double-digit growth pockets driven by IT corridor demand. Pune, though relatively calmer, has also moved up steadily in the mid-single-digit range. Most property research reports now expect pan-India urban prices to grow ~6–7% annually over the next 1–2 years, even if volumes moderate.

For a salaried investor who has been doing everything “right” financially—running SIPs month after month—this creates a painful trade-off. Either liquidate years of disciplined investing to arrange the down payment, or delay the purchase and risk the same home becoming meaningfully more expensive next year.

But this is not a binary choice. There is a third path that many investors overlook.

The Down Payment Dilemma, Explained Simply

Let’s put numbers to the problem.

A ₹1 crore apartment in Mumbai or Bengaluru typically requires a 15–20% down payment, translating to ₹15–20 lakh upfront. If prices rise 6–7% over the next year, that same property costs ₹1.06–1.07 crore, pushing the down payment requirement even higher.

Now consider an investor who has built a ₹20–30 lakh mutual fund portfolio through SIPs over 5–7 years. Redeeming this portfolio to fund the down payment comes with four silent costs:

First, long-term capital gains tax, currently 12.5% on gains above the exemption threshold, reduces the usable amount immediately. Second, you permanently break the compounding engine that took years to build. Third, redemption often happens at a time dictated by property timelines, not market conditions. And finally, once exited, restarting the same portfolio discipline is psychologically and financially harder than it sounds.

This is where Loan Against Mutual Funds (LAMF) becomes relevant.

What Is Loan Against Mutual Funds (LAMF)?

LAMF is a secured overdraft facility where your existing mutual fund units are pledged as collateral. You continue to remain the owner of those units. They stay invested, earn returns, and your SIPs can continue uninterrupted.

Under most lender frameworks, investors can access 45–50% of the portfolio’s value as a revolving credit line. Interest is charged only on the amount actually used, and only for the duration it is used.

Because this is a fully secured loan, interest rates are meaningfully lower than unsecured borrowing. Most large lenders currently price LAMF in the 10–11% range, compared to 14–20% for personal loans.

All LAMF structures operate under the regulatory ecosystem governed by Securities and Exchange Board of India, ensuring transparency in lien marking, valuation, and disclosures.

Why LAMF Works Specifically for Home Down Payments

The biggest advantage of LAMF is not just cost—it is timing flexibility.

When you pledge mutual funds, your capital continues compounding. If your equity portfolio earns ~11–12% over time and your LAMF interest cost is ~10–10.5%, the net carry cost is marginal, especially when viewed over a short bridge period of 6–24 months.

For example, instead of redeeming a ₹30 lakh portfolio to arrange ₹15 lakh, an investor can pledge the same portfolio, access ~₹13.5 lakh through LAMF, and arrange the remaining amount through savings or short-term cash flows. The portfolio remains intact, and the down payment is funded without destroying long-term wealth.

Another underrated benefit is speed. Most modern LAMF platforms allow digital lien marking and same-day disbursal, which matters immensely when developers demand booking cheques quickly.

A Real Client-Style Example

Consider Priya, a 32-year-old software professional in Bengaluru. Over six years, she has built a ₹25 lakh mutual fund portfolio entirely through SIPs. She now plans to buy a ₹1 crore apartment, with a ₹20 lakh down payment and the balance funded via a home loan.

If Priya redeems her mutual funds, she faces capital gains tax on accumulated gains and is left with a sharply reduced investment base. More importantly, she gives up the next phase of compounding, which typically accelerates after year five.

Instead, Priya uses a blended strategy. She pledges her ₹25 lakh portfolio and receives a LAMF limit of ~₹11–12 lakh. The remaining gap is bridged through short-term cash planning and income flows. Her SIPs continue, the portfolio stays invested, and the LAMF is gradually repaid over 12–24 months as bonuses and savings come in.

Five years later, the difference is stark. The property is acquired at today’s price, while the mutual fund corpus—never broken—has had the chance to grow meaningfully. What looked like a liquidity problem was actually a structuring problem.

What LAMF Is Not

LAMF is not a substitute for long-term borrowing like a home loan. It is also not meant to fund lifestyle consumption indefinitely. Its strength lies in short-to-medium-term liquidity needs where the underlying investments are sound and meant to stay invested.

Used without planning, it can increase financial stress. Used thoughtfully, it becomes one of the most efficient balance-sheet tools available to disciplined investors.

Where Tikona Capital Finserv Pvt. Ltd. Fits In

At Tikona Capital Finserv Pvt. Ltd., we work with investors who already have mutual fund portfolios and are facing time-sensitive goals like home purchases. Our role is not just to arrange a LAMF facility, but to structure it correctly.

We evaluate your existing portfolio to determine eligible schemes and realistic loan-to-value ratios. We assess how much liquidity is actually required, how long it will be needed, and how repayment should be aligned with your income profile. Most importantly, we ensure that your core SIP discipline and long-term asset allocation remain intact.

For many investors, LAMF becomes a temporary bridge that enables homeownership today without sacrificing financial independence tomorrow.

Legal Information and Disclosures: The information provided in this article is for educational purposes only and should not be considered as investment advice. Investors should conduct thorough research and seek professional guidance before making investment decisions. SEBI Registered Research Analyst INH000009807. This newsletter expresses the views of the author as of the date indicated, and such views are subject to changes without notice. We have no duty or obligation to update the information contained herein. Further, we make no representation, and it should not be assumed, that past performance is an indication of future results. This newsletter is for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or financial products. Certain information contained herein concerning economic/corporate trends and performance is based on or derived from independent third-party sources. We believe that the sources from which such information has been obtained are reliable; however, we cannot guarantee the accuracy of such information or the assumptions on which such information is based. For further information, disclosures, and disclaimers, visit www.tikonacapital.com

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Property prices in Mumbai have surged 44% in the under-construction premium segment in H1 2025. Bangalore saw a 35% jump. Pune recorded 6-7% growth. For the salaried professional who's been diligently investing ₹20,000 monthly in SIPs for the past 5 years, these numbers create an impossible choice: redeem your ₹15 lakh mutual fund portfolio to arrange the down payment, or watch your dream home slip away as prices climb another 6.5% next year. But there's a third option that most homebuyers overlook entirely, one that lets you keep your investments growing while unlocking the capital you need today.