Has anyone transfered from an MPhil to a Phd? Has anyone applied for an MPhil then switch to Phd 1 year into the course?
How is the process like and are there any implications?

I have applied for Phd program but I was unable to secure any scholarships for Phd. Therefore, I was thinking of applying for an MPhil first, then if possible, switch to Phd halfway through the program. 
Is this possible and advisable? 
Is the scholarship selection threshold lower for MPhil?
Some programs are designed like that, start on MPhil and transfer at a suitable point to PhD.

The suitable point is usually agreed with your advisor.

You need to discuss with your advisor and plan accordingly.