How to buy a second house as an investment like an experienced property investor (without any savings)

This simple trick is used because it maximises returns and the amount you can borrow.

You’ll probably know interest rates are at historical lows, which is why so many homeowners want to learn how to buy a second house. Current market conditions make it harder for first home buyers, but it’s a great time to consider buying an investment property if you already own a home… because you can use “leverage”.

ANZ (one of the many banks iRefi.co.nz works with) describes this perfectly on their website:

“Leverage” is when you buy an investment property using borrowed money instead of using your own. The more you borrow, the more you’re said to be “leveraged”. Leverage is one factor that can accelerate your investment return. If your investment property goes up in value, the higher the return on the actual money you’ve invested.

How to buy a second house as an investment property

Using your home as security, you’ll be able to borrow more money, because you’re leveraging to buy more investments that will help grow your wealth. This is also known as “freeing up equity”.

What’s the best way to increase your borrowing for a second house? The trick is to refinance your current mortgage onto a lower interest rate and at a higher valuation. This will help you get debt free faster or reduce your mortgage repayments on the existing mortgage while also re-valuing your property to increase your potential borrowing as a deposit for the second or third property (make sure you consider using a different bank as not to keep all of your eggs in one basket). The aim is to buy another property without needing any savings.

The reason it’s often suggested you refix or refinance to a new bank for lower rates and the mortgage top-up is you’ll have more bargaining power and usually get a better offer and some cash from the bank new bank to help you switch. (for an unknown reason some banks seem to work harder trying to attract new business instead of trying to keep existing customers happy). Their loss, your win.  

Your bank is NOT going to call you and say: “Hey, would you like a lower rate?”, because they would lose money…

By breaking your mortgage and moving it to a lower rate, it hurts their profits. Refinancing can save the average Kiwi homeowner thousands of dollars in interest repayments over the remaining fixed term of their home loans. You could also knock years off your overall mortgage. Most of our clients save at least $3,000 in less than 12 months. A recent client of ours (a fireman) in Palmerston North is saving $22,845 over the next three years because he took our advice after a quick mortgage review. You can get free mortgage advice because banks pay our fees (don’t worry though we work for you, not for the bank).

See how much you could save with a lower interest rate using our refinance calculator.

Who is iRefi?

You might be wondering who we are and what we’re all about. iRefi.co.nz was set up to help Kiwis with their mortgages. After working in the financial and digital industries for a few years, our team came together to bring the mortgage process online. If you’ve got a mortgage, you’ll understand that it’s time-consuming dealing with the bank and all the paperwork. To streamline things for ourselves we’ve tried to offer the easiest and most secure online mortgage process in New Zealand.

On the wall of our office is “TREAT EVERY CLIENT AS IF THEY WERE YOUR GRANDMA!” and something we remind ourselves of often. The words and processes in the banking and mortgage industries are sometimes confusing… we do our best to make them as simple as we can.

Want to take advantage of low-interest rates?

See below the interest rates trending down… The advantages of getting a lower interest rate is reducing your interest repayments or paying down your initial debt faster.

mortgage interest rates

‘The fall [in interest rates] has prompted mortgage holders to break their fixed term agreements to shift to a better rate.’ Tamsyn Parker, Money Editor, NZ Herald

Getting a lower interest rate should be your goal while the option is there. Once a bank realises you now understand your options, they’ll start talking about break fees and then maybe offer lower rates and some cash back. If you took out a home loan a few years ago, the odds are you could be saving thousands of dollars each and every month because interest rates have dropped significantly.

In our opinion if your current interest rates are 4.8% or higher it’s worth exploring if refinancing is a good option for you regardless, of whether or not you want to buy another property…

Mortgage rates change all the time, and it’s hard to keep up and understand your options. Banks are not in the business of telling you how to save money, they like you to spend money and pay as much as possible in interest… this is one of the reasons why New Zealand banks are some of the most profitable in the world!

What about break fees?

A common question is ‘what is a break fee or early repayment fee?’. It’s the upfront dollar amount the bank will charge you to break a fixed term mortgage. i.e. if you are fixed for three years at 5.9%, the bank will charge you to move to a lower rate such as three years at 4.39%. It’s a dirty trick to try and confuse people and scare them away from refinancing. The break fees can set you back a few thousand dollars (which can be added to the mortgage and paid off quicker on a lower interest rate), and we factor this into your overall savings. You don’t usually need the cash on hand to pay the break fees as it’s likely your bank will let you borrow a little more to cover them. Generally, it always makes sense to refix/refinance, regardless of the break fees, it just depends on your goals and if you qualify. The higher the break fee, the more worthwhile it’s likely to be for you to refinance (bigger mortgages bigger savings from lower rates).

You can estimate what your break fees will be for your mortgage using our break cost calculator.


“I would just like to thank you so much for your assistance; we will definitely be recommending your company to family and friends. What stood out the most is your customer service, going that extra mile and providing spreadsheets that were so easy to read. I didn’t have to guess what questions to ask like I do with other banks. You knew what you were talking about and supplied the information I needed to know. Everything was explained in simple English. Thank you Angela


We have a calculator on our website (www.irefi.co.nz) that can help you work out your likely savings. Most kiwis just take the interest rates the bank offers and don’t even shop around. The banks know this… Some people get a little worried about break fees and give up. Most banks will offer cash-back to help cover or waive these fees and because you’ll be going onto lower rates and looking at topping up your mortgage it’s well worth it.

The best way to buy a second home in NZ & what the bank won’t tell you…

Here’s a real world example: Patrick purchased a house two years ago for $438,000 with a 20% deposit making his mortgage around $350,000. In the last two years, Patrick has made the repayments to his mortgage, and his equity has grown from 20% to 25% by reducing his mortgage to about $330,000. He then got a revaluation on his property and found that it’s now worth $630,000 meaning his equity has increased significantly and is now closer to 50% (because the mortgage amount is smaller in proportion to the house value). The way to work this out for your own situation is to take the house value and minus the mortgage amount and divide this number by the house value again. Multiply that figure to get your equity. $630,000 – $330,000 / $630,000 x 100 = 47.6% Equity

Now in theory, Patrick should be able to borrow up to 80% of the value of his home (80% of $630,000 is $504,000) while keeping 20% equity. His mortgage is $330,000 which means he can borrow another $174,000 into his bank account as revolving credit to help with the deposit on another home (or renovations, holidays, etc).

Making your repayments is just one way of increasing the equity in your home. With house prices on the rise (especially in Auckland), your property is likely to go up in value increasing your equity in the property also… this is referred to as capital gains. Borrowing back down to 20% is how you get some cash from your home.

In Auckland, investment properties are subject to a 70% Loan to Valuation Ratio (LVR) limit, which means you’ll need to be able to make up a deposit worth 30% of the purchase price of the new property.

Remember, the price you paid when you bought your home does not reflect the true value of your home today. You can get your home revalued (or a free/cheap e-valuation) and borrow back down the 20% equity mark (maybe even more) and get this money into your bank account as revolving credit that can be used as a deposit for the second home. This is ‘free money’ because you only pay interest when/if you spend it. This situation won’t last forever, and many experts will tell you a market correction could happen at any time. Revolving Credit is like a big overdraft, and you’ll only be charged interest on what you spend. You will need to have discipline with this privilege. Congratulations you have the bank’s money to help you buy a 2nd home.

It’s all a game to see how savvy you are. To succeed at property investing you have to know more than the average homeowner.

Once we know more about your current situation the strategies of negative gearing, capital gains, cash yields, renovations and revaluations will be explained in detail to you. A video series is in production to help you with this too. Unlike the property tutors you hear advertised on the radio/TV, we give this advice to you and our clients for free… we know it’s in our clients’ best interests to have all of this information available.

As an online mortgage adviser, our aim is to protect you and help you get the upper hand when it comes to negotiating with different banks. You don’t want one bank having control over all of your assets. Most property investors who work with mortgage advisers will use multiple banks and have mortgage advisers structure mortgages and advise accordingly, unlike dealing directly with a bank who will always encourage you to have all of your lending and products at one place. It’s important to have people you can trust in your inner circle giving you the advice you can rely on.

The Auckland housing ‘bubble’ could burst at any time, we’re already starting to see signs of a slowdown, the reality is that no one can predict the future, but the well prepared can always keep a step ahead.

Don’t miss out on the opportunity to refinance and top up your mortgage now while rates are low and banks are looking to lend large amounts of money. Timing is perfect to set yourselves up for an investment property purchase in the next 3-12months when you find what you perceive to be a good buy. When/if the market dips then house prices will come down, and you’ll be ready, cash in hand, to take advantage of properties that sell below market value… when something gets handed in at auction or appears to have been on the market for a while, you will be there ready.

Refinancing after your property’s value has increased makes a lot of sense. Do NOT be scared of revolving credit if you don’t spend the money you don’t pay interest. Do NOT be scared of increasing your mortgage because this is inevitable if you want to buy property. It can make sense to have good debt when money is cheap (interest rates are low, and property gains are high). You have to know the risks and weigh this up with the potential rewards. Don’t overextend yourself.

Getting advice from mortgage advisers like iRefi.co.nz is free because banks pay our fees. There are no costs to find out your options; there’s no rush, no threat to your credit score… we’re here to help set up your mortgages properly. You’re probably asking by now who we are. Well iRefi.co.nz was set up to help Kiwis with their mortgages, most of the time everything is done online or by phone and email (we do meet some of our clients). Comparing different bank rates and negotiating with them was previously a time-consuming and stressful process. With iRefi Online Mortgages, it’s easy.

The application and ‘paperwork’ are done online in digital format, so you don’t even have to meet a broker or the bank. It does not matter what bank you’re with currently… There’s always competition between the banks to take advantage of. It’s easy to find websites to compare mortgage rates but if you want to guarantee the best rate you must know this – the advertised rate is NOT the lowest rate. Banks expect negotiation tactics, but most people don’t know how to ask or what to say. That’s why we do it for you. The lowest mortgage rates are usually only available to those who know the right things to say, how to have an airtight application and how to negotiate with banks. Competition between banks is very good for you, the homeowner… but only if you take advantage of this.

iRefi helps you with mortgages at major banks, and many other lenders… it’s very quick and free to find out your options and if we can help you.

Please note: not everyone qualifies, there is a shortage of houses, and you need to actually own a home with some equity to benefit from this strategy. Most of our clients will have a combined income of over $120k+ and have a house that’s, at least, $650k in value already.

We’ll teach you a few property investment tricks like:

  • Why there’s no such thing as savings if you have a mortgage
  • Capital Gains vs. Cash Yields
  • Negative Gearing
  • How revolving credit unlocks so much potential
  • How using two banks is sometimes better than one

Jian and I started looking for an investment opportunity back in June 2015. Blandon arranged pre-approved finance for a number of properties so we could bid at auctions. We won an auction for a property in Howick, and Blandon arranged a wonderful finance solution for us involving the refinancing of our existing home and the loan for our new investment property. Blandon’s help and support has been fantastic throughout, and he is an excellent example of a true professional. Jian and I have no hesitation in highly recommending Blandon and iRefi to everyone! Bill


 How long does it take?

You’ll have to spend around 30mins on the application; it should be easy to do from the couch, do it in your PJs at 3 am if you want. No need to meet bankers or brokers, we’ll do everything by email and phone (we do meet some clients). All of the questions we ask are to collect information banks require. There’s no obligation. If you decide to proceed, we’ll need a few documents, but we won’t collect any of that information until we know refinancing or borrowing more for an investment property is right for you.

Buying an investment property is not for everyone…

It takes commitment to finding and buying the right property and having enough income and patience to build up equity. If you start early enough and buy well, you could build up a portfolio of 10 or so properties in 20 years. Tell us your financial goals. We’ll help you get the mortgages and finances in place, and share the strategies used by other property investors, many of whom are just starting to build their portfolios. We manage many multi-million dollar mortgage portfolios and know how to help you get there.

We are members of the New Zealand Financial Services Group with over 750 advisers. There are strict regulations to protect you & your information.

Why can you trust iRefi Mortgages? As members of the NZ Financial Services Group, we adhere to strict rules that allow us to work directly with most banks. Strict rules protect you and at any time, you can contact the Financial Services Complaints Ltd to complain or comment on our services. Read more about why you should trust iRefi.

How do we get paid?

Banks pay mortgage advisers like us commissions based on the loan size… this is why we can offer our advice to you for free. One thing we’ll promise is that if it doesn’t make sense for you to refinance or buy an investment property, we’ll tell you… putting you in a position to grow your wealth long term and become debt free faster is our goal. We only work with people who can be responsible with their finances. Read more here.

By the way, it’s free for you to work with us, no costs or obligations and at any time you can just say ‘no thanks’, and we’ll wish you all the best.

It’s hard to do this unless someone teaches you and guides you through the numbers and strategies. They don’t teach this stuff in school. If your friends don’t invest in property, you might have no one else to talk with except the bank… the problem with that is bankers tend to move around frequently and are restricted by the rates and product of their own brand. What you want is access to multiple options and advice from mortgage advisers who advise clients just like you.

In the last few months alone, we’ve helped tradesmen, teachers, pilots, doctors, engineers, mechanics, engineers, builders, CEOs, interns, people from all walks of life from Auckland to Invercargill with their home loans… the benefit of doing things online is everyone saves time and money.

Building up a portfolio of 5 or more properties requires a commitment to being prepared to buy when the market dips… people that are forced to sell during a market slump will provide property investors with head start over other investors. When is best to refinance? Now… just use the calculator at the bottom of this page to tell us about your mortgage(s) and we’ll send you some options for lower rates. This is how people accumulate dozens of investment properties; you don’t need to pay a property tutor thousands of dollars for this knowledge (but feel free to investigate this for yourselves).

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