Lvr and exemptions

I have recently been to our local branch to discuss the fact that I am about to purchase a property on selling my current owner/occupied property, however I was dumbfounded to find that I will lose 29,000 due to the fact that my rental Is currently at 146,000 and needs to come down to 117,000 to make it 65% equity. ( difference 29,000).
On reading FAQ from the Reserve Bank site it advises that I am exempt from the LVR as long as I am switching home loans and not increasing the loan.
My bank manager told me that I am still liable to suffer the loss of the 29,000 but as banks are governed by the Reserve Bank I would have thought that I was right with being able to borrow against both properties being at 80% as apposed to 80% owner occupier and 65% rental, I thought they would/ can both remain at 80% so as to not be effected by the LVR.
Someone please advise.

Hi @Kiwibird, I’m just writing to say that I’ve seen your question and I’ll get back to you asap, I’m just locating the best person to respond to this as I’m not qualified to comment in this area of expertise. Thanks for your patience :slight_smile: