The Reserve Bank has announced more changes to Loan to Value Ratio (LVR) restrictions. With these changes, you may need a larger deposit when you borrow to buy a home.
The LVR restrictions apply to all residential owner-occupied lending, as well as residential investment lending across New Zealand
What is LVR?
The Loan to Value Ratio (LVR) is the proportion of your home loan compared to the value of your property. We calculate LVR by dividing the amount of your home loan by the value of the property we have as security. Here’s an example:
Your deposit: $50,000
Value of the property: $250,000
Your home loan: $200,000
Your LVR: 80%
Your LVR is the home loan amount compared to value of your property. In this example, the LVR is 80% ($200,000/$250,000=80%).
What do the LVR restrictions mean for you?
- If you’re buying an owner-occupied property to live in, you’ll generally need at least a 20% deposit.
- If you're buying a residential investment property, or you’re using a residential investment property you already own as security for a new loan, you'll generally need at least a 40% deposit.
- Everyone's situation is different and there are some exemptions to the LVR restrictions that apply. For more information about the LVR restriction and whether you qualify for any of the exemptions available, talk to an ANZ Home Loan expert.
There have been other changes made by the Government recently that may affect you:
- You may need to pay tax if you sell a residential property two years after you bought it (if bought after 1 October 2015). This is called the "bright line test". Visit the Inland Revenue website and search 'Property Changes' for more information.
- All buyers and sellers of New Zealand property must complete a Land Transfer Tax Statement (LTTS). Visit the Land Information New Zealand website to download the LTTS. To complete a LTTS, you’ll need an IRD number or a Taxpayer Identification Number (if you don’t normally live in New Zealand). To apply for an IRD number, you'll need a New Zealand bank account number.
- Landlords must now provide smoke alarms and insulation in rental homes.
Talk to our Home Loan experts
To find out how these changes, including exemptions, apply to your situation talk to us. We're New Zealand's number one home loan provider, and we were rated the #1 bank for Service and Expertise in the 2015 NZ Property Investor Federation Survey**. Our staff can talk you through the changes and help you create a solution to achieve your property goals.
* ANZ lending criteria, terms, conditions and fees apply. A copy of the Reserve Bank Disclosure Statement published by ANZ Bank New Zealand Limited may be obtained on request from any ANZ branch.
** Source: New Zealand Property Investor Federation Survey 2015.
This material is for information purposes only. Its content is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised financial adviser service under the Financial Advisers Act 2008. It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product. If you wish to consult one of ANZ's financial advisers, please contact us on 0800 269 296.