Mortgages qualify for KiwiSaver mortgage diversion
15 September 2008 Media Statement
More mortgages qualify for KiwiSaver mortgage diversion
Amendments to the mortgage diversion regulations signed by Order in Council today allow more types of mortgages to qualify for the mortgage diversion facility, Finance Minister Michael Cullen and Revenue Minister Peter Dunne said today.
"The mortgage diversion facility allows members to divert up to half of their contributions to repaying the mortgage on their home, so long as the mortgagee and the scheme provider agree. This recognises that reducing one’s mortgage can be an effective way of saving.
“Current regulations mean this facility is limited largely to table mortgages and the like. This restriction was put in because of concern that people with flexible mortgages would use the diverted contributions to repay part of their mortgage but then automatically borrow these contributions up to their credit limit,” the ministers said.
In discussions with the banking sector it has been become clear that many mortgages are of a flexible nature meaning that the current mortgage diversion facility has limited application. The new regulations will allow more types of mortgage to qualify.
The majority of mortgages will qualify provided the diverted contributions reduce the home loan. This does not prevent a bank agreeing to lend more against the home but it does prevent diverted contributions automatically being offset by an increased home loan.
“The amended regulations will ensure that the
mortgage diversion facility works as intended, and is
accessible and is just one of the many incentives designed
to make it easier, more attractive and more rewarding for
people to save through KiwiSaver,” Dr Cullen and Mr Dunne
The regulations will be published in the New Zealand Gazette and come into force 28 days after the date of their notification in the Gazette.
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