How leveraging can multiply your buy-to-let returns

May 7, 2025

Conventional wisdom for property investors is that buying in cash is the best option, but is that always the case?

There are benefits to cash purchases, such as not owing money to a lender, but it can also mean you are making your money work as hard as possible. That means you might be missing out on growth opportunities and not optimising your income.

Leveraging is one way to multiply the impact of your cash and maximise your returns when you buy UK investment property.

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What is leverage buying?

Property investment is different to other investments like stocks and shares. You can’t just buy a few shares in a property; you have to finance the whole thing, so you need the full amount of capital one way or another.

That can mean using your cash reserves to buy a property outright. In this case, you will own it with no debt and won’t make monthly mortgage repayments. Your rental income becomes 100% profit, minus expenses. Likewise, you won’t have to repay any sums to the bank when you sell the property, so you will get 100% of the proceeds, including all the capital appreciation.

The downside is that you are putting all your cash reserves in one property. Once they are spent, you won’t have more cash available for another investment until your reserves build up again. That’s where leveraging comes in as an alternative option.

Leveraging is a strategy where you borrow money from a bank or other lender to purchase a property, leaving you with capital in the bank while still owning the property.

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What are the benefits of leveraging compared to buying in cash?

Leveraging offers several advantages to investors that can be key to helping you achieve your financial goals.

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Invest more than you have on hand

When you buy in cash, you are limited by how much capital you have. That can be a problem if it clashes with your investment goals. For example, you might want to invest in luxury city centre apartments because they typically enjoy faster rental and value growth.

However, if you are set on buying in cash, you may be priced out of the most popular markets, such as Manchester and Liverpool.

By leveraging, you can use only a portion of your capital and still end up owning a higher value asset than you would otherwise have been able to afford. Leveraging opens up new markets to you and increases your potential returns.

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Build a larger portfolio

The benefits of UK buy-to-let property for sale increase when you own more properties. Growing your portfolio also means that you will have a greater diversity of properties, potentially reducing your risk.

Leveraging enables you to do this in a similar way to how it allows you to buy more expensive properties. Rather than using all your cash to purchase one property, you can use a portion of it on each property and borrow from lenders to make up the remainder of the purchase price. In essence, you are using other people’s money to grow your wealth.

More properties mean more rental income and more capital appreciation. This is all income that you wouldn’t have access to if you bought in cash.

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Make the most of falling mortgage costs

This is also a great time to leverage, thanks to falling mortgage costs. The Bank of England has been cutting the base rate of interest over the last nine months, and that has caused mortgage rates to fall.

Within the last week, all major lenders confirmed that they are offering fixed-rate mortgages with an interest rate of under 4% for the first time in years. There is speculation that there could be another three cuts by the Bank of England throughout 2025, too. While that can never be guaranteed, it is likely that it would cause mortgage rates to fall slightly further as each lender attempts to attract more customers.

All of that means this is a good time to consider leveraging rather than buying in cash. Mortgage rates are at a historically low level, and you can get long-term fixed products at good rates, giving you the ability to invest in multiple properties without sacrificing your rental yield.

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What are the risks of leveraging compared to buying in cash?

It can be argued that leveraging to buy more properties means you are also increasing your risk. If you are earning higher profits, it’s also true that your losses can potentially be higher. However, you can take practical steps to make sure that you minimise your risk while maximising your profits.

For example, you can invest in a location with…

A shortage of available property, including the most desirable property types, like city centre luxury apartments
Low construction rates
High population growth
Strong tenant demand
Local universities
Growing economy
Nearby regeneration masterplan projects
Places that are close to water and are therefore more desirable

Buy-to-let investment locations that fulfil these criteria are much more likely to deliver strong house price and rental growth. In turn, they are less likely to be risky investments, so you can leverage them with more confidence.

Examples of the best buy-to-let locations in the UK include cities in the North of England like Manchester and Liverpool, economic hubs like Birmingham and attractive seaside towns with multiple rental needs like Eastbourne.

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More complex than buying in cash

There are many different ways to invest in buy-to-let property. Everyone will have different needs and strategies that suit them. Leveraging is one of those, and it’s fair to say that it is more complex than paying in cash.

There are more steps to consider when you’re getting a mortgage, and that applies even more so when you are making multiple purchases at the same time.

That doesn’t mean it has to be more complex, however. It may look that way on the surface, but if you choose the right investment advisor, then everything will be taken care of for you.

Your advisor will:

Understand your situation and design a bespoke strategy for you
Recommend the right off-plan buy-to-let properties
Provide property market and investment insights
Help you arrange solicitors and mortgage advisors
Guide you through the completion and handover process
Arrange ongoing lettings and management of your property

An investment advisory service which offers all that reduces a complex, multi-property purchase into a simple process that requires only minimal work for the investor.

Want to learn more about leveraging and discover the UK’s best buy-to-let property for sale? Contact our team of experts today to start your investment journey.

How leveraging can multiply your buy-to-let returns

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