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Loan to Value Ratios – LVR Restrictions

LVR restrictions – Here’s everything you need to know about them

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This fast, simple and clear LVR Calculator will show you the LVR of your property in 2024, along with what you can potentially borrow against it.

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Laine Moger, a seasoned Journalist and Property Educator with six years of experience, holds a Bachelor of Communications (Honours) from Massey University and a Diploma of Journalism from the London School of Journalism. She has been an integral part of the Opes team for two years, crafting content for our website, newsletter, and external columns, as well as contributing to Informed Investor and NZ Property Investor.

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LVR calculator – How to calculate LVR

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Best LVR Calculator (2024)– Calculate Property Loan to Value Ratio

LVR calculator

What does LVR stand for?

LVR stands for <a href="https://www.opespartners.co.nz/mortgage/lvr">Loan to Value Ratio</a>. It measures the amount of debt a property (or asset) has compared to its worth.
If you have a property worth $600,000 and it has a mortgage of $200,000, then the LVR is 33.3%.

What is an LVR Restriction?

An LVR restriction is where the Reserve Bank bans the commercial banks, e.g. ASB, from lending above a particular LVR.
In NZ, 90% of each bank’s lending to owner-occupiers needs to be at an LVR of 80% or lower.
For property investors, 95% of bank lending needs to be at 65% or less.

How do I calculate LVR?

LVR is calculated by taking a property’s mortgage and dividing it by its value.
LVR = (Mortgage / Property Value ) x 100
For instance, if you have a mortgage of $200,000 and a property worth $600,000, the LVR is 33.3% i.e. ($200,000 / $600,000 ) x100 = 33.3%.

What is the LVR for first home buyers in NZ?

Under the <a href="https://www.opespartners.co.nz/mortgage/lvr">LVR restrictions</a>, first home buyers can borrow up to 80% against the value of a property.
However, there are ways to borrow outside of the LVR restrictions.
10% of bank lending to owner-occupiers can also be outside of these restrictions.
And some first home buyers can access the government’s First Home Loan. In this scenario, a first home buyer can buy a property using just a 5% deposit. However, that is subject to bank approval, which rarely happens with just a 5% deposit.
In practice, it is common for a first home buyer to use a 10% deposit. And 38% of first home buyers use less than a 20% deposit to get started.

Can I borrow more than 80% for a property?

Owner-occupiers – people purchasing their own home – often can. However, property investors usually cannot.
An owner-occupier can borrow over 80% either by:
<ul><li>Using a government-backed First Home Loan (criteria applies)</li><li>Securing a loan that falls out of the LVR restrictions, i.e. in the 10% of loans a bank can lend to owner-occupiers outside the restrictions</li><li>Or by working with a non-bank lender – who aren’t subject to the LVR restrictions.</li></ul>

What does 80% LVR mean?

80% LVR means that the mortgage on a property makes up 80% of the property’s value.
For instance, a $1m property with an 80% LVR means the mortgage is $800,000.

What’s the difference between the Reserve Bank and a Commercial Bank?

Commercial banks are businesses like ASB, ANZ, BNZ and Westpac. These banks lend out money for mortgages and give you regular transaction accounts.
The Reserve Bank sets the rules and regulations for commercial banks. They ensure that the monetary system stands up and that the other banks don’t take on too much risk.

LVR calculator – How to calculate LVR

What does LVR stand for?

What is an LVR Restriction?

How do I calculate LVR?

What is the LVR for first home buyers in NZ?

Can I borrow more than 80% for a property?

What does 80% LVR mean?

What’s the difference between the Reserve Bank and a Commercial Bank?

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