How to Buy a New Home and Keep Your Current One as a Rental

What if your next property move didn’t require selling your current home?

For many New Zealand homeowners, the dream is not only to own a new home but to turn their existing one into a rental. Whether you’re looking to build wealth, create passive income, or maintain a foothold in a growing market, holding onto your property while buying your next can be a smart long-term strategy.

Why keep your current home as a rental?

Retaining your home as a rental can make sense if:

  • You’ve built up strong equity in the property
  • It’s in a desirable or growing area
  • You’re building a long-term property portfolio
  • You’re relocating but may want to return in the future

Rental income can help support the mortgage while you move forward with your next purchase.

Using equity to fund your next home

Equity is one of the most powerful tools available. For example:

  • Current home value: $850,000
  • Current mortgage: $400,000
  • Available equity: approx. $450,000

Depending on income and lending criteria, you could use a portion of that equity as the deposit for your new home, while keeping the first property as a rental. A mortgage adviser can calculate exactly how much equity you can access.

Rental income can boost your borrowing power

When applying for a new mortgage, lenders will often use 70–80% of projected rental income to offset costs. This can strengthen your application, but:

  • You’ll need a rental appraisal to confirm expected income
  • The property must meet Healthy Homes Standards
  • You’ll still need to show you can cover both mortgages during vacancies or interest rate changes

Deciding which home to live in vs. rent out

Your decision will depend on lifestyle goals, investment potential, and financial return. Some owners move into a newer home while renting out their older property; others downsize their living space and keep a high-performing property as a rental. The right choice depends on your long-term strategy.

Risks and responsibilities to consider

Owning two properties brings opportunities but also obligations:

  • Can you cover both mortgages during vacancies or market downturns?
  • Will you self-manage tenants or hire a property manager?
  • Do you have a buffer for maintenance, repairs, and rates?

Being realistic about the responsibilities helps ensure your investment is sustainable.

Get expert advice early

The earlier you get advice, the better your outcome. A mortgage adviser can help you:

  • Structure your lending to maximise investment and tax benefits
  • Assess exactly what’s possible with your income and equity
  • Provide clarity so you can move forward with confidence

Let’s plan your next move

Turning your home into a rental while buying your next property can be a powerful step towards building long-term wealth. Done right, it can help create financial security and open the door to future opportunities.

If you’d like to explore your options, crunch the numbers, or understand the best lending strategy for your situation, our team at Loan Market Queenstown is here to help.

Call us on 03 441 1307 or book your free appointment online today, and let’s plan your next move together.


Published: 25/8/2025
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