Guide to the Reserve Bank Restrictions

With the Reserve Bank’s new loan rate restrictions put in place since 1 October 2016, real estate investors are now required to provide a 40% deposit for bank loans, with exception to new builds which only require a 20% deposit. In the table below I have broken down some fundamentals to help you better understand these changes.



What’s The Definition of a New Build?


Before 1 October 2016

A property was only considered a New Build before the concrete foundation is poured.


After 1 October 2016

A property is considered a New Build if sold by the original owner within 6 months of the development being completed, and if unlived in.


Do These New Rules Apply To All Banks?


After 1 October 2016 these restrictions apply to all New Zealand’s regulated banks, however non-bank lenders are not bound by these regulations so a lesser deposit may apply.


Is A Cash Deposit Required Under The New Rules?


No, it can come from equity held in other properties. This means you can borrow the full amount of the purchase price, so up to 80% against the new property and the remainder against an existing property.


Do These Changes Affect Existing Property Lending Created Before 1st October?


Existing investment property lending that is currently over the Loan to Value Ratio (LVR) is not affected unless additional lending is required from the lender at which time that lender is required to ‘bring the lending back into line’ i.e. reduce the lending to inside LVR rules.  So unless borrowing additional funds from that bank this lending can stay as it is.


Thank you Greg Scott from The Home Loan Shop for providing us with this information.


Greg Scott, The Home Loan Shop

Tele: 04 384 5700

Mob: 027 472 9153

Email: gregscott@homeloanshop.co.nz.

Website: www.homeloanshop.co.nz


Interested to hear how we can help you and your investment? Find out how our Wellington Property managers can help you. We manage property in the Wellington and Hutt Valley regions. Feel confident your property and tenants are looked after by our professional Property managers with our property management services .

Discover how our Care & Return System will benefit you. Receive a no-obligation, FREE rental appraisal today for your Wellington investment property!

Call Jordan Atkinson - 027 297 0873

Quinovic Kent Terrace | Wellington


Call Allan Hartley - 027 522 9084

Quinovic Johnsonville | Wellington


Call Helen Vance - 027 487 8103

Quinovic Hutt Valley | Wellington

Get the latest news for landlords

Get a Free Rental Appraisal

Free and no-obligation! Receive a detailed report on the earning potential of your investment property.

Call Allan Hartley Today

Quinovic Johnsonville & Northern Suburbs

027 522 9084 or email me

Call Jordan Atkinson Today

Quinovic Kent Terrace Wellington

027 297 0873 or email me

Follow us: 

Facebook
Linkedin

Newsletter

Receive latest investor news straight to your inbox. Sign Up

Call Helen Vance Today

Quinovic Hutt Valley

027 487 8103 or email me

© Quinovic Kent Terrace, Johnsonville and Hutt Valley Wellington Property Management 1988-2020. Privacy Policy