M1 Borrow is the simplest and lowest cost way to borrow money. M1 Borrow allows you access to a flexible portfolio line of credit, offered at one of the lowest interest rates on the market.
You can use M1 Borrow to bypass traditional lending hurdles and get easier access to credit at a lower rate than the average mortgage, auto loan, or personal loan. With traditional methods, if you want to use invested funds to make a big purchase, you have to sell securities and incur tax consequences, which could be substantial. Traditional loans can require a significant amount of paperwork, a lengthy approval process, and high rates.
With M1 Borrow, you can borrow up to 35% of your invested portfolio at a 3.50% interest rate instantly (2.00% if you are using M1 Plus). There's never been such a low cost, convenient, and flexible way to borrow money.
Who is eligible for M1 Borrow?
There's one qualification for M1 Borrow: a taxable brokerage account with a $10,000 or greater invested balance. IRA accounts do not qualify for M1 Borrow.
There's no additional paperwork or credit check required, and you cannot be denied if you meet the qualifications.
How do I sign up for M1 Borrow?
There's no need to enroll in M1 Borrow. All eligible taxable accounts will be automatically enrolled. When your M1 invested portfolio surpasses $10,000, you are given an instantly accessible line of credit. You do not need to use the line of credit and will only be charged for what you use. When requesting to borrow, you will be able to choose whether you would like to keep that money in M1 or transfer it to your bank account.
You can initiate a one-time transfer of Borrowed funds to your external bank, your Invest account, or your Spend account. Please note that you will only be able to initiate one-time transfers with Borrow as the "from" account. You cannot initiate a recurring transfer schedule with Borrow as the "from" account.
- Start on the Borrow tab, and click the "Borrow" button.
- This will re-direct you to a screen that prompts you to input your transfer details, including the amount you want to Borrow and where you want to send the Borrowed funds. Click "continue."
- Review your transfer details. If everything is accurate, click "confirm." This will create your transfer.
- You can view your pending and previous transfers under the Transfers tab.
What does it cost?
The M1 Borrow interest rate is variable and tracks the Federal Funds Rate. The current M1 Borrow rate is 3.50% with a 1.50% discount for M1 Plus subscribers (M1 Plus rate for Borrow is 2%). You can learn more about M1 Plus here.
In most cases, the interest expense can be deducted from investment income for tax purposes. This can lower your after-tax cost of borrowing money even further.
You will be charged interest at the end of every month, and you will only need to pay for the line of credit borrowed. This amount is deducted from your cash balance if available or will increase your amount borrowed. Learn more about M1 Borrow billing.
How do I pay back my loan?
To pay back your loan, visit M1 Borrow and select "Pay Back." You will be shown your current amount borrowed. Enter the amount you would like to pay back and select whether you'd like to pay back the amount from your external bank, your Invest account, or your Spend account. If your cash balance for your Invest account isn't high enough to pay back the full amount you wish to pay, we will sell from your portfolio to make up the difference.
You also have the option to create a payback schedule by going to the Transfers tab, clicking the "move money" button, selecting "Recurring Transfer," and inputting your transfer details with Borrow as the "To" account. After you click continue, review and confirm your changes, you will be able to view the payback schedule under Transfers.
There is no set payment schedule; you have complete control over how much and when you pay back, except in the case of a maintenance call. Learn more about maintenance calls below.
What are the risks of using M1 Borrow?
There are a few risks with using M1 Borrow, including:
Increased interest rates: As the Federal Funds interest rate changes, your M1 Borrow rate will change as well.
Maintenance Calls: If your portfolio value declines, your account can trigger a maintenance call.
Magnified Losses: If you use M1 Borrow to increase your M1 portfolio investments, any losses in your portfolio will be magnified.
Using margin involves risks: you can lose more than you deposit, you are subject to a margin call, and interest rates may change. To learn more about the risks associated with margin loans, please see our Margin Disclosure. M1 Borrow available on margin accounts with a balance of at least $10,000. Does not apply to retirement accounts.