Investment Property Loans NZ - Grow Your Portfolio

Investment Property Loan FAQs

• How much deposit do I need for an investment property in NZ?

  For a standard existing residential investment property, you will generally need a minimum deposit of 30%.

  However, you can secure a much lower deposit requirement of 10% to 20% if the property qualifies for a Reserve Bank of New Zealand (RBNZ) exemption. These exemptions primarily apply to:

  • New Construction / Build-to-Rent: If you are building a new investment home, ANZ allows a deposit as low as 10% (90% LVR), while Westpac and The Co-operative Bank allow a 20% deposit (80% LVR).
  • Turnkey & Off-the-Plan Purchases: Buying a brand-new home directly from a developer prior to or within six months of completion allows for a 10% deposit at ANZ and BNZ (subject to funding approval), or a 20% deposit at The Co-operative Bank.

  Conversely, if you are looking at non-standard properties such as small apartments (under 40m² to 50m²) or serviced apartments, banks consider these higher risk and may require a much larger deposit of 35% to 50%.

• What LVR applies to investment properties?

  Under standard RBNZ restrictions and bank guidelines, the maximum Loan-to-Value Ratio (LVR) for a standard residential investment property is 70% LVR.

  This means the bank can lend up to 70% of the property’s purchase price or registered valuation, whichever is lower.

  If you own both an owner-occupied home and an investment property, banks like ASB and Westpac can apply a Combined Collateral (Weighted Average) LVR. This allows you to borrow up to a combined limit of 80% LVR against your owner-occupied home and 70% LVR against your investment property.

• Can I use equity from my home to buy an investment property?

  Yes, absolutely. You do not necessarily need cash sitting in a bank account to buy an investment property; instead, you can unlock the “usable equity” in your current home to act as your deposit.

  Your usable equity is calculated as the current market value of your home minus your outstanding mortgage balance, keeping within the bank’s maximum 80% LVR limit for owner-occupied properties.

  For example, if your home is worth $1,000,000 and your current mortgage is $400,000, the bank will allow you to borrow up to 80% of your home’s value ($800,000). This means you have $400,000 in usable equity that you can draw out (via a top-up) to cover the 30% deposit and acquisition costs for your new investment property.

• Is interest on an investment property loan tax deductible?

  Because tax laws in New Zealand are subject to legislative change, clients should always seek independent advice from a Chartered Accountant regarding current deductibility rules.

• Do investment property loans cost more than owner-occupier loans?

  Generally, no—but with a few important exceptions regarding structure and portfolio size:

  1. Interest Rates: Property investors have access to the exact same competitive residential fixed and floating interest rate products as owner-occupiers (such as ANZ’s home loan suite or Westpac’s Choices products). You do not pay a higher “retail rate” simply because the property is a rental.
  2. Entity & Establishment Fees: If you borrow in your personal name, establishment fees are typically $0 at banks like Westpac and ANZ. However, if you set up a non-personal entity—such as a Company or a Trust—to hold the investment property, BNZ may charge an establishment fee of up to 1% of the total loan amount.
  3. The Commercial Threshold: If your investment portfolio becomes exceptionally large or complex, the bank will transfer your files to their commercial desk, where interest rates are higher and commercial establishment fees apply. This typically occurs if:
     • Your total rental-reliant debt across all banks exceeds $2,500,000 (Westpac).
     • Your scaled rental income makes up more than 50% of your total income (ASB).
     • You hold four or more dwellings on a single title (BNZ)

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