Leverage means controlling a bigger position than your own money covers, by borrowing the rest — from a broker, or built into a product. Your own money is the margin: the part of the position you've actually paid for. Leverage multiplies percentage moves on your money in both directions. At 5:1, a 10% move in the asset is a 50% move in your stake.
Because the lender's money comes first, there's a floor under your margin. When losses eat into it past that level, you get a margin call: add more money, or cut the position. If you don't, or can't in time, it's forced liquidation — the position is sold for you at whatever the market price is at that moment, often near the bottom of the move. The loss is locked in, and if the price gaps past the floor overnight, then outside products with negative balance protection you can end up owing more than you put in.
The borrowed £4,000 is still owed. The fall came out of your share first.
Educational content only. It is not personal financial advice.