You may have heard the Reserve Bank wants to slow house price inflation by restricting how much Banks can lend to their customers. These restrictions apply to owner occupiers as well as investors. Banks must comply with these rules, and some have gone even further by tightening their lending policies to make it harder to get a loan approval.

Here’s a quick recap of the current restrictions:

• 10% of owner occupier home loans can be over 80% LVR

• 5% of investor loans can be over 60% LVR

LVR means “Loan to Value Ratio” and is calculated by dividing your loan amount by the property’s value. So, if your loan is $400K after buying a $500K property your LVR is 80%

Some scenarios where these restrictions may not apply:

• Building a new home or buying from the developer within 6 months of completion;

• Bridging loans - when you’ve purchased before selling your existing home;

• Refinancing your existing loan;

• Welcome Home Loans for First Home Buyers;

• Fixing fire damage, earthquake strengthening and renovations to comply with rental property standards (e.g. installing insulation)

An experienced mortgage broker can save you time and money as it’s their job to know all the different lending policies, can quickly calculate how much you’re able to borrow, and will negotiate on your behalf to get you a great deal.

I’m based in Auckland but can help wherever you live in New Zealand. Living overseas is not necessarily a deal breaker, as I’ve recently sorted loans for NZ citizens living in Sydney and London. Contact me now to find out how I can help you.

Charles Priestley
Mortgage Adviser

(021) 114 8299

charles@choicemortgages.co.nz