of real estate is by taking a loan for a portion of the purchase price. Under the current 20 per cent rules, a buyer can borrow up to 80 per cent of a property’s worth. So if he wishes to buy a house worth 50 lakhs, then he pays 10 lakhs as down payment, while furnishing the remaining 40 lakhs with debt. In this case, he is said to be ‘leveraged’ four to one. Leverage can work both for and against you. Let us look at both scenarios with a simple example.
