There are broadly two different ways you can borrow to invest
1. Geared share funds
Geared share funds are 'internally' geared. Basically, the fund manager uses the fund’s assets to support the borrowing and the investor's liability and loss is limited to the amount they invest. As such, in the worst case, you may lose your total investment, however there is no requirement for you to service or repay any residual loan.
2. Home Equity Gearing
If you are a homeowner you may be able to borrow against the equity in your home and then use the money to buy investments. The equity in your home is used as security for the loan, not the investments. In the worst case, you may lose the total investment and still have the loan remaining which needs to be repaid and serviced. If you do not comply with your loan requirements the lender could take recovery action against you. In a worst case this may involve, selling your home to repay the loan.
Gearing Method Comparison:
The below table outlines some of the main differences between gearing options: