Understanding leverage: a beginner’s guide

Leverage means borrowing money, like a mortgage, to invest in property. This powerful tool can magnify your returns, turning a small increase in property value into a much larger percentage gain on your initial deposit.

However, leverage also magnifies losses just as effectively. A drop in property value can result in a substantial loss on your investment. These are often unrealised (on-paper) losses until you sell. You can also use increased equity for renovations or future investments.