What deposit do I need for an investment property?


You’ve bought your first house and now you are starting to think about adding another one and developing your property portfolio. Or maybe you are already a seasoned investor, but aren’t too sure how the new LVR changes will affect you. Let’s take a look….

During the Covid outbreak in 2020, the Reserve Bank lessened the rules around Loan to Value Ratios (LVR’s). This meant that it was possible to buy an investment property with as little as 20%, and was done mainly to give a boost to the property market, which was expected to suffer as a result of Covid and the lockdowns.

We all know that didn’t happen, with the property market soaring higher than ever. So in early December the Reserve Bank announced that LVR’s would be reviewed in March 2021, and it is tipped that a 40% deposit would be required on all investment lending. Right away, some of the banks changed their LVR requirements to meet the expected new rules, well in advance of the March 2021 deadline, however we still have access to some lenders doing 20% and 30% deposits.

While the change in LVR’s might make it slightly harder to get on to the investment property ladder, and a 40% deposit is considered the norm, there are always a number of various options that can be explored.  At Loan Market, we work with a whole range of lenders from main street banks to specialist lenders. These specialist lenders choose not to be a bank, so their products can be more tailored and flexible, because they are not restricted by the Reserve Bank in the same way as our major banks are. 

Land and build is also not subject to LVR’s and this is unlikely to change come March 2021. So a new build is potentially another good option for investors too.

We understand every deal is not black or white and that’s why we can offer solutions for the grey area. We can sit down and have a chat with you, and work out a plan that suits your individual circumstances and finances.  Give Loan Market a call today on 479 0163 and we can work with you on purchasing that next investment property with a loan term and deposit that suits you.