What Does LVR Mean?

LVR (Loan-to-Value Ratio) is calculated by dividing your loan amount by the property value. For example, a $600,000 mortgage on an $800,000 property equals 75% LVR.

For owner-occupied homes, up to 80% LVR is standard. Some borrowers may access 90-95% with restrictions. Investment properties typically require 70% LVR maximum (30% deposit).

Yes, new build purchases, bridging loans, [refinancing](/blog/when-is-the-right-time-to-refinance-your-mortgage) existing mortgages, and Kainga Ora First Home Loan scheme borrowing are typically exempt from standard LVR restrictions. This makes new builds attractive for buyers with smaller deposits.

The Reserve Bank implemented LVR controls in 2013 to moderate rapid house price increases and reduce financial system risk. By restricting borrowing relative to property value, the policy encourages caution among buyers without raising interest rates across the board.

Higher LVR loans (above 80%) are considered riskier by banks, which may result in slightly higher interest rates or additional fees. Lower LVR positions typically give you access to better rates and more lending options.

Owner-occupied properties can typically borrow up to 80% LVR (with limited exceptions to 95%), while investment properties are restricted to 70% LVR (30% deposit) in most cases. Banks can allocate up to 10% of their investor lending to higher LVR loans.

You can improve your LVR by saving a larger deposit, paying down your existing mortgage faster, or benefiting from property value increases. Using [genuine savings](/blog/what-counts-as-genuine-savings-when-applying-for-a-mortgage) over time demonstrates financial responsibility to lenders.

Yes, your LVR determines how much equity you can access for renovations, investment property deposits, or other purposes. Most banks will only lend up to 80% of your property value, so your usable equity is the difference between 80% and your current LVR.