What is a margin loan?
A Margin Loan is a type of secured loan that allows you to borrow against the value of eligible securities you already own in your eligible M1 Individual Brokerage Account, Joint Brokerage Account, and/or Trust Account at competitive rates.
This means that your brokerage is lending you money with the understanding that your investments can be sold to cover the Margin Loan, if necessary, and you only need to pay interest on your line of credit when you use it.
You can take an M1 Margin Loan of up to 50% of your portfolio value at 5.65%* interest rate.
Key features:
Borrow up to 50% of eligible securities’ value
Flexible repayment schedule (no set payment date) as long as maintenance requirements are met.
Eligibility requirements
To use margin loans on M1, you must:
Have an eligible M1 Individual, Joint, or Trust brokerage account (IRAs and Custodial Accounts are ineligible)
Maintain at least $2,000 in marginable securities
Note: Not all securities are marginable.
What can you use an M1 Margin Loan for?
You can use an M1 Margin Loan for any purpose.
Two of the most common uses are:
Increasing your buying power to invest beyond the cash you have on-hand
Withdrawing cash to pay for something outside of M1 without selling your investments.
Flexible repayment
Margin Loans give you repayment flexibility to repay the balance when it works for you (except in the case of a margin call).
Learn more about how to pay back some or all of your M1 Margin Loan.
Margin interest
You will be charged monthly interest until you pay back the loan. Interest is deducted once a month in the following order:
Cash balance: Interest is taken from your available cash in the brokerage account associated with your Margin Loan.
Increase Margin Loan: If cash is insufficient and you have available margin, your Margin Loan balance will increase to cover the interest charge.
Sell Investments: If steps 1 and 2 aren't possible, M1 will sell investments in your account to cover the interest payment.
Margin requirement
The Federal Reserve’s Regulation T requires an investor to pay for at least 50% of their marginable securities using their own cash. This is referred to as an initial margin requirement.
Example: Let's say you want to buy 100 shares of Stock A priced at $50 per share and you have only $2,500 and not the entire $5,000.
With a 50% initial margin requirement, you can only take a Margin Loan up to $2,500 (50% of the total value) and would have to pay the remaining 50% using your own cash.
The borrowed amount as a percentage of the total investment value is called the initial margin. Your account equity in this example would be $2,500 ($5,000 investment value minus the borrowed amount).
Once you purchase securities on margin, FINRA Rule 4210 requires an investor to maintain a minimum equity of 25% of the total value of securities. This is referred to as a maintenance margin requirement.
Typically, when the market fluctuates and the value of your portfolio depreciates such that your equity drops below the maintenance margin requirement, a maintenance margin call will be triggered by your brokerage.
When there is a maintenance margin call, you will need to bring your equity back above the maintenance margin requirement by either depositing funds or selling securities.
While these are the minimum requirements mandated by the regulation, a brokerage could have higher minimum requirements to allow some fluctuations in portfolio value without triggering a maintenance margin call.
*Rates may vary
Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1 Finance LLC. Please look at your account statement to determine how your account is cleared.
All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using margin can add to these risks. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000 invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary.
Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.
This content was generated using artificial intelligence and is intended for informational and educational purposes only. While reasonable efforts are made to ensure accuracy, AI-generated outputs may omit key context; and should not be construed as financial, investment, legal, or tax advice. Users should independently verify all information and consult a qualified professional before making any financial decisions.
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