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More equity = lower interest

Ever wondered why some people get better interest rate deals than others? Perhaps you’ve had a chat at a barbecue and discovered your host is paying a lesser rate than you?

This could be the reason…

Lenders reward borrowers who hold more equity in their property. A lower rate will be offered if you have 70% equity compared to 20%. Why? Because it reduces their lending risk and the related saving can be passed onto the borrower.

This also means that as you build up equity in your property, your lender could be more amenable to negotiating a lower rate.

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