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 said.
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.
Further information is available at:
http://www.kiwisaver.govt.nz/
ENDS