Understanding leverage: a beginner’s guide

Leverage is borrowing money, like a mortgage, to invest in property. It significantly magnifies your financial outcomes.

A small increase in property value can create a large return on your deposit. However, leverage also amplifies risk, as a price drop can cause a major loss on your investment. These are unrealised (on-paper) changes until you sell. As property values rise, you can use the equity for renovations or other investments, respecting LVR limits.