Understanding leverage: a beginner’s guide

Leverage is borrowing money, like a mortgage, to invest in property. It can significantly magnify your returns; a 10% rise in property value could result in a 50% return on your initial deposit because you keep all the capital gains.

However, leverage also magnifies losses just as powerfully. A 10% price drop can result in a major loss on your deposit. This highlights the importance of viewing property as a long-term investment to ride out market fluctuations.