Back to Home loans

Understanding Residential Owner Occupied and Investor rates

Lending for residential investment property carries higher risk for banks compared with lending for owner occupied properties, and banks are required to hold more capital for this type of lending. 

For new lending from 23 October 2018 we’ve introduced two different interest rate types based on how your home loan is ‘directly secured’:

  • Residential Owner Occupied rate
  • Residential Investor rate.

For all home loans entered into before 23 October 2018, see the applicable rates table.

What is ‘directly secured’?

Directly secured means that your home loan and any property that secures your home loan, are in the same name. As the rate is determined by what is directly secured, any guarantor or related party properties will be excluded when determining the interest rate type that applies to your home loan(s).

Residential Owner Occupied rate

The Residential Owner Occupied rate will apply to home loans that are directly secured against either:

  • the home that you live in, or
  • the home that you live in and a residential investment or properties.

Residential Investor rate

The Residential Investor rate will apply for home loans that are directly secured by a residential investment property (or properties) only.  

Example scenarios

Home loan directly secured against the home you live in

Vincent and Aroha have a BNZ home loan that is directly secured by the home they own and live in.

Because their loan and their owner occupied property that secures their home loan are held in the same name, the Residential Owner Occupied rate will apply.

Home loan(s) directly secured by the home you live in and an investment property

Louisa has a BNZ home loan that is directly secured by both the home she lives in and an investment property.

Because Louisa’s home loan and both properties that secure her lending are held in the same name, the Residential Owner Occupied rate will apply.

Home loan(s) directly secured by investment property

Peter has a BNZ home loan that is directly secured by his residential investment property.

Because Peter’s loan and the residential investment property that secures his home loan are held in the same name, the Residential Investor rate will apply.

Home loan(s) directly secured by investment property and secured by a guarantee

Mia and Karl’s trust has a BNZ home loan that is directly secured by its residential investment property. The loan under the trust is also secured by a guarantee from Mia and Karl over Residential Owner Occupied property.

As a guarantee is not used to determine the interest rate type, the Residential Investor rate will apply.

If your property occupancy type changes

Any change in the occupancy status of the property or properties that secure your home loan(s) may affect the interest rate type that applies to your home loan(s). If this does change in the future, we’ll agree any changes to your interest rate structure with you.

If a residential investment property used to directly secure your home loan, becomes your principal place of residence, contact us as you may be entitled to the lower Residential Owner Occupied rate.

Need more help?

If you’re not sure which rate applies to you, or you need more information call us on 0800 275 269.