How Much Can I Borrow for an Investment Property?

Thinking about investing in property? Your borrowing power depends on several factors, including your income, existing debts, and deposit size.

Loan-to-Value Ratio (LVR) Rules

For investment properties, most New Zealand lenders require a 35% deposit. That means if you’re buying a $600,000 property, you’ll typically need at least $210,000 upfront. Some non-bank lenders may allow lower deposits, but at higher interest rates.

Income & Expenses

Lenders assess your income, current mortgage commitments, and other expenses to ensure you can handle repayments, even if interest rates rise. If you have a strong financial position, you may be able to negotiate more favorable terms.

Rental Income Consideration

Banks usually consider a percentage of your expected rental income when calculating affordability. This percentage varies by lender but typically ranges from 60-80%. Some lenders may also consider potential rental income from additional dwellings like granny flats.

Equity in Existing Property

If you already own a home, you may be able to use equity to fund your investment rather than a cash deposit. This allows you to leverage your existing assets to grow your property portfolio.

Interest Rates & Loan Structures

Investment property loans often have different interest rates than owner-occupied loans. For an investment, it's important to consider every option—fixed vs. floating rates, interest-only repayments, and revolving credit facilities—a skilled mortgage advisor can help you weigh your choices.

Additional Costs to Factor In

Aside from the deposit and mortgage repayments, you should budget for:

• Property management fees

• Maintenance costs

• Insurance and rates

• Potential vacancy periods

A mortgage advisor can help you get the best borrowing strategy for your investment goals. Before you dive in, crunch the numbers and get expert advice to make the most of your investment.

Ready to turn your investment plans into reality? Get a personalised borrowing assessment today and take the next step toward your property goals. Talk to an expert now.