Buying or selling a home comes with its own language. From OCR and LVR to DTI and CV, these market terms can crop up anywhere from property reports and news headlines to conversations with mortgage brokers and real estate agents.

If you've ever felt lost or confused, you’re not alone. Here’s a simple guide to the property terms every Kiwi buyer and homeowner needs to know.

OCR: And why everyone watches it#

The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank of New Zealand. It helps influence borrowing costs across the economy, including many home loan interest rates.

While banks set their own mortgage rates, changes to the OCR often affect how much it costs to borrow money. A higher OCR can lead to more expensive lending, while a lower OCR can make borrowing more affordable.

If you have a mortgage or you're planning to buy, OCR announcements can influence your future repayments and borrowing power.

LVR: Understanding your deposit#

LVR stands for Loan-to-Value Ratio. It’s the percentage of a property’s value that you’re borrowing from the bank.

For example, if you buy an $800,000 home with a $160,000 deposit, you’ll borrow $640,000. That gives you an LVR of 80%.

A lower LVR generally means you have a larger deposit, which can improve your lending options and reduce risk from the lender’s perspective.

DTI: How much can you comfortably borrow?#

Debt-to-Income Ratio (DTI) compares your total debt with your annual household income. It’s one of the ways lenders assess whether a mortgage is affordable over the long term.

Rather than focusing on your deposit, DTI looks at your ability to manage repayments based on what you earn. It helps ensure buyers aren’t taking on more debt than they can realistically service.

CV: A guide, not a price tag#

A Council Valuation (CV) is an estimated value prepared by your local council for rating purposes. It’s useful as a reference point, but it isn’t designed to predict what a property will sell for.

Market value is influenced by many other factors, including recent comparable sales, renovations, location, and buyer demand. That’s why homes often sell above or below their CV.

Asking price vs sale price#

These two terms are often confused, but they serve different purposes.

An asking price is the amount a seller advertises their property for, it reflects where the sellor sees value but may or may not be the same as the buyer.

A sale price is the final amount the property changes hands for. Depending on market conditions, it may be higher, lower or exactly the same as the asking price.

Generally, asking prices set the trend for selling prices because they are based on the most up-to-date local knowledge and property information that real estate agents have available.

Equity: The value you own#

Equity is the portion of your home that belongs to you rather than the bank. It’s calculated by subtracting the remaining mortgage from the property’s current value.

As you pay down your loan, or if your home increases in value, your equity typically grows. Many homeowners use accumulated equity when purchasing their next property or financing renovations.

Fixed or floating: Choosing a mortgage rate#

When taking out a home loan, you’ll usually choose between fixed and floating interest rates.

A fixed rate stays the same for an agreed period, giving you certainty over your repayments. A floating rate can rise or fall over time, offering greater flexibility but less predictability.

Many homeowners split their mortgage between both options to balance stability with flexibility.

Ready to start searching for your dream home? #

First, check out whether you meet the qualification criteria for the First Home Loan at kaingaora.govt.nz/firsthome, and then begin your property hunt on realestate.co.nz.