If you’ve ever bought a house in New Zealand, you’ve met LVR — probably when a bank told you how big a deposit you needed. For business owners, the same ratio decides something just as important: how much you can borrow against property you already own to fund the business.
This guide explains LVR in plain English, shows the maths, and clears up the most common confusion — the difference between the Reserve Bank’s headline LVR rules and the limits that apply to a business loan.
What is LVR?
Loan-to-value ratio (LVR) is the total lending secured on a property, divided by the property’s value, expressed as a percentage.
LVR = total secured lending ÷ property value × 100
A few quick examples:
| Property value | Owed against it | LVR |
|---|---|---|
| $700,000 | $0 (freehold) | 0% |
| $700,000 | $280,000 | 40% |
| $700,000 | $455,000 | 65% |
| $700,000 | $560,000 | 80% |
“Total secured lending” means everything registered against the property: the main bank mortgage, any revolving credit or offset facility, top-ups, and any second mortgage.
Why LVR matters to a lender
When a lender takes property as security, the risk it worries about is simple: if the loan isn’t repaid and the property has to be sold, will the sale cover the debt, plus costs, plus any fall in value?
The gap between the loan and the property’s value is the lender’s cushion. A 50% LVR leaves a big cushion; an 85% LVR leaves a thin one. That’s why lenders set a maximum LVR — a ceiling on how much total lending they’re prepared to have against a property.
Turning LVR into borrowing capacity
The practical question for a business owner is: how much more could I borrow against this property? The answer comes from the lender’s maximum LVR:
Usable equity = property value × maximum LVR − existing lending
Example: a Tauranga commercial unit valued at $900,000 with $300,000 owing. If a lender’s maximum LVR for that property were 65%:
- Maximum total lending: $900,000 × 65% = $585,000
- Less existing lending: $300,000
- Usable equity: $285,000
Total equity is $600,000, but the lender only lets you use part of it. The rest is the cushion. You can run your own numbers in the property equity estimator, which uses an illustrative LVR slider so you can test different scenarios.
What sets the maximum LVR?
There isn’t one national LVR for business lending. Each lender sets its own limits, and they typically move with:
- Property type. A standard house in a main centre is easier to sell than a lifestyle block, bare land or specialised commercial building.
- Location. Properties in Auckland, Wellington, Christchurch, Hamilton or Tauranga usually have deeper buyer pools than remote rural properties.
- Mortgage position. A first mortgage gets paid first from a sale; a second mortgage only gets what’s left. Second-mortgage lending usually has a lower maximum LVR as a result.
- Loan purpose and term. A short bridge with a confirmed sale is different from open-ended working capital.
- The valuation. Lenders rely on a value they trust — often a registered valuation. See property valuations for business loans.
The Reserve Bank’s LVR rules: what they do and don’t cover
Most Kiwis have heard of the Reserve Bank of New Zealand’s LVR restrictions. These are “speed limits” on how much of a bank’s new residential mortgage lending can be at high LVRs. After the Reserve Bank’s November 2025 decision, from 1 December 2025:
- banks can make up to 25% of new owner-occupier lending at LVRs above 80%;
- banks can make up to 10% of new residential investor lending at LVRs above 70%.
The Reserve Bank also introduced debt-to-income (DTI) restrictions from 1 July 2024 — broadly, banks can only do a limited share of new lending to owner-occupiers borrowing more than six times their income, or investors borrowing more than seven times.
Two things business owners should understand:
- These rules apply to banks’ residential mortgage lending. The Reserve Bank notes that DTI rules apply to bank lending, not non-bank providers, and business lending is excluded from DTI calculations.
- That doesn’t mean “no limits” elsewhere. Non-bank business lenders apply their own maximum LVRs for security — sometimes more conservative than the Reserve Bank’s thresholds, because they’re lending for business purposes and often in second position.
So if your bank has said no because of its own LVR or DTI position, that’s not necessarily the end of the road for a business-purpose loan secured on the same property.
LVR and a second mortgage
Say your home is worth $1,000,000 and your bank mortgage is $550,000 — a 55% LVR. A business lender taking a second mortgage looks at the combined LVR after its loan:
| Amount | Combined LVR | |
|---|---|---|
| Existing bank mortgage | $550,000 | 55% |
| Add a $100,000 business loan | $650,000 | 65% |
| Add a $200,000 business loan | $750,000 | 75% |
Whether the $100,000 or $200,000 version is possible depends on that lender’s maximum combined LVR for your property. Our guide to borrowing against property with an existing mortgage goes into how second mortgages work day to day.
How to improve your LVR position
If your numbers are tight, a few levers can help:
- Get a credible valuation. An out-of-date figure (or the council rating valuation) may understate value.
- Offer additional security. A second property, or a supporting party’s property, can bring combined LVR down.
- Reduce the ask. Borrowing only what the business needs — not a round number — often brings the LVR into range.
- Tidy up revolving credit. An unused revolving credit limit may still count as secured lending. Reducing the limit can help.
Where Loanster fits
Property-secured business loans arranged through Loanster run from $20,000 up to $1m, as a first or second mortgage over New Zealand property — home, rental, commercial or land — owned by you or a supporting party. No financials or tax returns are needed for the initial assessment, and bad credit, defaults and arrears are considered case by case.
Start with the equity estimator to see where your numbers sit, then send a 60-second enquiry if you’d like a lending specialist to look at the real figures.