How much equity do I need?

What does loan-to-value ratio (LVR) mean?

The LVR is a measure of how much a bank lends against residential property, compared to the value of that property.

For example: If you are buying a home for $600,000 and you have $120,000 for a deposit; the remaining $480,000 you need to borrow to buy the home is 80 percent of the home's total value - making your LVR 80 percent. Example of calculation: ($600,000 - $120,000) / $600,000 = 80%).

What is the maximum LVR?

A maximum LVR of 90% will apply to owner occupied property. A maximum LVR of 65% will apply to lending which is secured solely by a non owner-occupied property. The maximum LVR for lending which is secured by both an owner-occupied and non owner-occupied property will be based on:

  • 80% of the owner-occupied security.
  • 65% of the non owner-occupied security.

Home loans Reserve Bank of New Zealand's LVR restrictions