How to use M1 Borrow

• M1 Borrow basics

• Who is eligible for M1 Borrow?

• How do I sign up for M1 Borrow?

• What does it cost?

• How do I pay back my loan?

• What are the risks of using M1 Borrow?

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M1 Borrow Basics

M1 Borrow is a simple way to borrow money at a low cost.

Borrow allows you access to a flexible portfolio line of credit offered at one of the lowest interest rates on the market—no paperwork or credit check needed.

With Borrow, you can borrow up to 35% of your portfolio at a 3.50% interest rate. M1 Plus members can borrow at just 2%.

Chart showing interest rates compared to M1 

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Who is eligible for M1 Borrow?

Any M1 client who has $5,000 or more invested in a taxable brokerage account is eligible for Borrow. There are no credit checks or additional paperwork, and you cannot be denied if you meet the requirements. 

IRA, Custodial, and Trust accounts are not eligible for Borrow. 

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How do I sign up for M1 Borrow?

All eligible taxable accounts are automatically enrolled in Borrow.  

When your portfolio surpasses $5,000 in invested equity, you are given access to a line of credit. You do not need to use the full line of credit available and will only be charged interest for the amount used.  

When requesting to borrow money, 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 
  • M1 Invest account 
  • M1 Spend account 

Here’s how it works: 

  1. Under the Borrow tab, click the "Borrow" button. 
  2. Input the amount you want to Borrow and where you want to send the Borrowed funds. Click "continue." 
  3. Review your transfer details. If everything is accurate, click "confirm." This will create your transfer. 
  4. You can view your pending and previous transfers under the Transfers tab. You can view your Borrow details via the Borrow tab. 

You cannot initiate a recurring transfer schedule from Borrow. 

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What does it cost?

Borrow charges a variable interest rate that tracks the federal funds rate.  

The current Borrow rate is 3.50% or 2% for M1 Plus members. Learn more about M1 Plus. 

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’ll be charged interest at the end of every month, and you’ll only need to pay for the amount borrowed. This amount is deducted from your cash balance, if available, or will increase your amount borrowed. Learn more about Borrow billing. 

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How do I pay back my loan?

M1 Finance account screen showing amount borrowed, credit limit, and credit status in Borrow tab

While interest is charged monthly, Borrow does not have a fixed repayment schedule, and you can repay the principal on your terms (except in the case of a maintenance call). 

To make a payment, visit 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 would like to pay back the amount from your external bank, your Invest account, or your M1 Spend account. 

If you select your Invest account, your cash will be used first, but if your cash balance is lower than the amount you want to pay back, 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 "Move Money," selecting "Recurring Transfer," and inputting your transfer details with Borrow as the "To" account.  

After you review and confirm your changes, you will be able to view the payback schedule under Transfers. 

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What are the risks of using M1 Borrow?

There are a few risks with using 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 $5,000. This does not apply to retirement, custodial, or trust accounts. 

 

 

 

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