What do LVR restrictions mean to you

On October 1st 2013 the RBNZ will bring into force Loan to Value restrictions to curb the growing credit frenzy.
The short version is, the credit market has a limited volume of credit for those wanting to borrow more then 80% of the value of the anticipated purchase property.

This is an important tool to protect our economy in the event of a down turn, and with a currently mixed global economy and uncertainty around when US will stop its Quantitative Easing (printing money/introducing new money into the economy), it is a good idea, particulary when we consider that the last Global financial crisis was (in short) created from excessive lending.

For the first home buyer this means that you will either need to:

• Acquire a "welcome home loan" (which is not subject to LVR but has a maximum purchase price of $485k); or
• Have a 20% deposit; or
• if you are a strong applicant you may fall into the allowed 10% that are not subject to the required 20% deposit restriction (this will depend on your banks opinion).

Please see the RBNZ explanation for a nice short description: LVR Restrictions- A guide for borrowers
See welcome home loan page: Welcome home loan