LVR lending restrictions are tighter for loans secured by investment property than for owner occupied property.
Mortgage lending by banks is placed into one of the following classifications of LVR restriction.
Investor loans – 35% deposit / 5% of investor lending
LVR lending restrictions are tighter for loans secured by investment property in response to the risks associated with this type of loan. Low-deposit (high-LVR) loans in this category are those loans that are more than 65% of the property’s value (35% deposit).
High-LVR loans can make up no more than 5% of a bank’s total new lending in this category.
Owner occupier loans – 20% deposit / 15% of owner occupier lending
This class of loan is for borrowing secured against owner occupied property. Low-deposit (high-LVR) loans are defined as those loans that are more than 80% of the property’s value (20% deposit).
These loans can make up no more than 15% of a bank’s total new lending in this category.