Borrowing against your investments without selling them. The calculator shows your limit, what the interest costs, and above all the market drop that triggers a margin call.
35% is the maximum. The real rate depends on each holding: a riskier position counts for less.
Variable rate tied to prime. It moves without asking your opinion.
Drop that would trigger a margin call
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Credit limit
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Margin still available
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Interest per month
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Interest per year
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After the simulated drop
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Simplified estimate. The real limit is computed holding by holding according to each one's margin requirement, and it is recalculated daily. Educational tool: not a credit offer and not investment advice.
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The mechanism
Borrowing without selling, and why it appeals
A portfolio line of credit is a separate margin account secured by the investments you pledge as collateral. You get cash without liquidating positions, which avoids triggering a taxable capital gain and leaves your portfolio invested.
At Wealthsimple the limit runs up to 35% of eligible value across the pledged accounts, with a rate advertised from 3.95% depending on client status. No credit inquiry is required, since your assets answer for the loan. Interest accrues daily and is deducted once a month.
Registered accounts generally cannot serve as collateral. An RRSP or RESP stays outside the calculation, as do joint accounts on some platforms. Only non-registered accounts feed the limit.
The real risk
The margin call arrives sooner than people expect
If your available margin falls below zero, the broker can demand an immediate deposit or sell holdings itself to restore the balance. Those forced sales happen during a decline, so at the worst possible moment, and they crystallize losses you would never have chosen to realize.
The mechanics are brutally simple. Borrowing the full limit leaves no room for error: the first drop puts you in a call. Borrowing half the limit gives you roughly 50% of cushion before the problem appears. The calculator above shows that threshold for your own numbers.
A detail many people miss: margin requirements on individual holdings can be raised without notice when market conditions deteriorate. Your limit can shrink while your portfolio hasn't moved a dollar. The risk materializes precisely when everything else is going wrong.
⚠️Leverage amplifies losses as much as gains. Borrowing to invest can cost more than your original stake, and only makes sense for someone able to sit through a prolonged decline without touching it.
Judgment
When it holds up, and when it doesn't
The soundest use is short-term bridge financing. A down payment to cover for a few weeks before another property sells, a tax bill, an opportunity that won't wait. Borrowing at 5% for three months costs far less than selling a holding and paying tax on the gain.
The most dangerous use is the opposite: borrowing to invest more. It works while markets rise, then turns violently. With a variable rate, you can end up paying more at the exact moment your portfolio is losing value.
Between the two sits the usual prudence: stay well below the limit, keep cash elsewhere to cover a call, and never count on selling the collateral to repay. If you're weighing other forms of credit, a home equity line often carries a lower rate and has no margin call.
Tax
Interest deductibility, with conditions
In Canada, interest paid on money borrowed to earn investment income is generally deductible. The condition is the direct link: the funds must actually produce taxable income, and the trail has to hold up with the CRA.
What earns nothing: borrowing to contribute to a TFSA, to renovate the kitchen, or to take a trip. Since TFSA income isn't taxable, the related interest isn't deductible.
Mixing deductible and non-deductible borrowed money in a single account makes the demonstration considerably harder. An accountant is worth the fee before structuring anything like this. See our tax guide.
FAQ
Common questions
Up to 35% of eligible value across the pledged accounts at Wealthsimple. The real percentage depends on each holding: the riskier a position, the less it counts. The limit is recalculated daily.
Non-registered accounts. RRSPs and RESPs generally cannot be pledged, and neither can joint accounts on some platforms.
When your available margin drops below zero, the broker can demand an immediate deposit or sell holdings to restore the balance. Those sales happen during a decline and trigger taxable dispositions.
No. Your investments secure the loan, not your credit file. That's also why the rate sits below an unsecured personal line of credit.
No, it's variable and tracks Canadian prime with a spread tied to your client status. Interest accrues daily and is deducted monthly.
Generally yes if the money earns taxable investment income and the trail is traceable. No if the borrowing funds a personal expense or a TFSA contribution. Confirm with an accountant.
Yes. Margin requirements on individual holdings can change without notice. Your limit can therefore drop even when your investments hold their value.
A portfolio line of credit assumes a non-registered portfolio already exists. To start one, code LOIO3A gets you a $25 bonus plus $10 by Interac e-Transfer after the claim form, for $35 total.
