How margin interest builds up
A margin loan against your share dealing account has no term and no fixed repayments. Interest builds up each day on the balance you owe and is usually billed monthly. The interest for a period is the balance times the yearly rate times the days, divided by the days in the interest year.
This page starts with a 365-day year, but your broker's agreement decides, and we have not checked the UK day count against a broker's agreement. Switch to 360 if your agreement says so.
Worked example: £50,000 at 8% for 30 days
On a balance of £50,000 at 8% a year, 30 days cost £328.77 on a 365-day year, which is £10.96 a day. On a 360-day year the same loan costs £333.33. Over 90 days, £100,000 at 7% costs £1,726.03 on 365 days and £1,750.00 on 360 days, so the day count matters most on larger or longer loans.
Rate tiers
If your broker charges a lower rate on larger balances, choose two or three tiers. Blended means each slice of the balance is charged at its own tier's rate. Whole balance means the entire balance is charged at the rate of the tier it falls in. Check your broker's rate table to see which it uses.
For a £50,000 balance with the first £25,000 at 9% and the rest at 6%, blended interest is £308.22 for 30 days, a rate of 7.50% on the whole balance. Charged whole at the second tier's 6%, it is £246.58. A balance exactly equal to a tier's limit is treated as being in that tier.
The margin call price
Your broker sets the minimum equity share it requires, called the maintenance margin. A margin call happens when your portfolio falls to the loan divided by one minus that share. With a £50,000 loan and a 30% maintenance margin, that is £71,428.57. A £100,000 portfolio is £28,571.43 above it, so a fall of 28.57% would trigger a call. Your equity is 50.00% of the portfolio.
If the account holds 1,000 shares of one stock, the price at which the call happens is £71.43 a share. Use your own broker's maintenance figure: this page does not assume a minimum.
Tax and what is left out
This page does not work out tax and does not compound posted interest into the loan. A margin loan is a demand loan, so your broker can usually ask for more money or sell your holdings if prices fall.
For tax on the interest and on your gain, use the UK margin loan tax calculator.
Use the right country page
US brokers use their own terms and, in the examples we read, a 360-day year.
For the US, open the US margin loan interest calculator.
For any currency, use the margin loan interest calculator.
Inputs for the UK margin loan interest calculator
Days in the interest year
The divisor for the daily rate, 365 or 360. This page starts at 365 for the UK; your agreement decides.
Rate tiers
One rate, or two or three tiers by balance. With tiers, choose blended or whole balance and enter each tier's limit and rate.
Margin loan balance
How much you owe the broker, assumed level for the whole period.
Margin interest rate (per year)
The yearly rate your broker charges. With tiers, this is the rate on the first tier.
Days borrowed
How many days you hold the loan.
Portfolio value
The market value of everything held in the account, used for the margin call level.
Maintenance margin
The least equity share your broker requires. Brokers set their own, so check yours.
Shares held in one stock (optional)
To see a margin call price per share. Enter 0 to skip.
CALCULATOR QUESTIONS
UK margin loan interest calculator questions
How do I calculate margin loan interest in the UK?
Multiply the balance by the yearly rate and the days, then divide by 365 or 360. On £50,000 at 8%, 30 days cost £328.77 on a 365-day year.
Should I use 365 or 360 days?
Use whichever your broker's agreement states. This page starts at 365 for the UK, which we have not checked against a broker's agreement.
What triggers a margin call?
Your portfolio falling to the loan divided by one minus your broker's maintenance margin. With a £50,000 loan and a 30% margin, that is £71,428.57.
Can I lose more than I invested?
Borrowing magnifies losses. If prices fall, your broker can ask for more money or sell your holdings, and you still owe the loan.
Does the interest get tax relief?
This page does not work out tax. The UK margin loan tax calculator covers the treatment of the interest and of your gain.