As before, in the first year, you have paid 4 lakhs in interest. But this time, after the first year, assume that your house has lost value by 10 per cent. So now it is worth only 45 lakhs. Now if you sell the house, your total revenue will be 45 lakhs. Since you have to repay your lender with 40 lakhs, at the end, you will be left with 5 lakhs, which is a 50 per cent loss on what you started with. Once again, notice how leverage has caused you to lose more money. If you had instead bought a house without leverage with your initial 10 lakhs, and if you had sold it later at a 10 per cent lower
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