Thinking about growing your wealth through property? Buying an investment property is a popular path for many Kiwis—and with the right structure and strategy, it can help you build long-term financial security.
At LifeDirect Mortgages, our mortgage advisers are here to help you navigate the process—from working out how much you can borrow, to finding the right lender and structure to match your goals.
Why Invest in Property?
New Zealanders have long seen residential property as a solid investment—and for good reason. The right property can deliver:
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Rental income to help cover the mortgage
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Capital growth over time as property values increase
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Tax benefits on deductible expenses like interest, rates, and maintenance
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A tangible asset you can see, improve, and control
It’s not without risks, but with the right advice, property investment can be a powerful addition to your financial plan.
How Much Can I Borrow for an Investment Property?
When buying a rental property, most banks in New Zealand require:
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At least a 35% deposit for an existing home (i.e. up to 65% LVR)
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A 20% deposit for new-build properties, which are treated more favourably under current LVR rules
This means if you're buying a $700,000 existing property, you’ll generally need at least $245,000 as a deposit. This could come from:
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Equity in your current home
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Cash savings
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A mix of both
Our advisers can help you figure out how much equity you can access and whether a standalone investment loan or top-up strategy is best for your situation.
How Banks Assess Investment Loans
Banks take a slightly different approach when assessing investment property loans. They’ll look at:
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Your personal income and existing debts
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Potential rental income from the property (usually calculated at 70–80% of the market rent)
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Ongoing costs, like rates, insurance, and maintenance
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Any existing property loans or liabilities
Lenders want to ensure that you can service the loan—even if the property is vacant for a while or if interest rates go up.
Structuring Your Investment Loan
When it comes to structuring the mortgage, there’s no one-size-fits-all. You might choose:
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Interest-only repayments (common for investors wanting to minimise outgoings and maximise cash flow)
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Principal and interest (to build equity faster and reduce debt over time)
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Fixed or floating rates—or a mix of both
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Separate borrowing entities (such as Look-Through Companies) for tax efficiency
Our mortgage advisers can walk you through the pros and cons and help you structure your loan to match your investment strategy.
What About Tax?
As of 1 July 2024, the Bright-Line test has been reduced to 2 years—meaning if you sell a property more than two years after purchase, you won’t generally be taxed on capital gains (unless you're flipping properties or it's your business).
Other key tax considerations include:
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Interest deductibility: The rules around claiming mortgage interest as an expense are changing, but many investors can still claim some or all interest depending on the property type.
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Ownership structures: Using a Look-Through Company (LTC) or trust may provide better tax outcomes and asset protection—though this is something to discuss with an accountant.
Note: We always recommend seeking tax advice to ensure your investment is set up correctly from day one.
How a Mortgage Adviser Can Help
Buying an investment property involves more moving parts than a typical home loan. A LifeDirect mortgage adviser can help you:
- Work out your borrowing power and how to unlock equity in your existing home
- Compare lenders—as each bank has different rules for investors
- Structure the loan smartly for your financial and tax goals
- Navigate changing regulations and lender policy updates
- Streamline the paperwork and keep the process smooth
We’re here to advocate for you, not the bank—and we’ll keep your long-term financial goals front and centre.
Start Building Your Property Portfolio Today
Whether you’re a first-time investor or looking to expand your property portfolio, the right mortgage advice can make a big difference. At LifeDirect Mortgages, we’ll help you take a smart, strategic approach to investment lending—so you can move forward with confidence.
