What is Mortgage Diversion?
Mortgage Diversion is an intitiative built into KiwiSaver. It allows members to pay off their mortgage and still save for retirement. It allows members to divert
up to half of their contributions toward their mortgage repayments on their prinicpal residence. Both the lending institution (mortgagee) and the KiwiSaver provider
(Koinonia Fund) must agree to participate.
The Koinonia Fund is offering Mortgage Diversion to qualifying members.
Are there any rules for Mortgage Diversion eligibility?
Yes, there are a number of rules set out that need to be met in order to qualify to use Mortgage Diversion.
Member eligibility
- Members must have contributed to their KiwiSaver account for 12 months.
- Both the Koinonia Fund and the member's mortgage lender have agreed to participate in Mortgage Diversion.
Mortgage eligibility
- The mortgage must be over the mortgagor's principal residence and must secure obligations in respect of that residence.
- Mortgage Diversion is not available where the residence is in a family trust or a Loss Adjusting Qualifying Company (LAQC).
- The facility is available for new and existing mortgages.
- Contributions diverted from the member's KiwiSaver scheme may only be applied to the payment of amounts (including prinicpal, interest or any other amounts payable) that are owing under the home loan facility secured by the qualifying mortgage.
- The member must not be able, without making specific application to the mortgagee to access, withdraw, or redraw (as applicable) the amount of any diverted contributions.
- To avoid doubt, the above restrictions apply even if the home loan facility -
a) is a reducing revolving credit contract; or
b) permits amounts that have been paid by that person over and above any repayment amount or minimum payment amount specified, or amounts that have been paid in advance of any specified schedule of repayments, to be accessed, withdrawn, or redrawn or otherwise advanced to that member (if applicable).
The lender is responsible for assessing whether your mortgage is eligible.
Am I eligible for Mortgage Diversion?
Use this flow chart to determine if you qualify for mortgage diversion.
What contibutions can be diverted?
Only employee contributions can be diverted. Employer contributions cannot be diverted, and nor can any Government contributions such as member tax credits or the kick start.
How much can I divert?
The amount you can divert is capped at no more than 50% of your total contributions. Contributions must be a fixed dollar amount.
Any amount diverted towards your mortgage do not count towards the calculation of your member tax credit entitlements. Using mortgage diversion does not reduce your employer contribution entitlements.
Are their any fees for mortgage diversion?
The Koinonia Fund charges a one off $25 fee to set up mortgage diversion for a member plus a monthly charge of $2.
How do I participate in mortgage diversion?
The following steps must be completed in order to apply for mortgage diversion.
1) Request a mortgage diversion application form from the Koinonia Fund. A copy of the form is available here.
2) Complete the form and have the stuatory declaration witnessed by a person authorised to do so.
3) Thake the completed form to your Lender. They will advise of their specific terms, conditions and/or fees if applicable.
4) Your mortgage Lender will complete the form and forward it to the Koinonia Fund.
5) The Koinonia Fund will process the application and advise you of the outcome.
The Koinonia Fund has no control over when contributions payable to the Scheme are received, and these payments may arrive late on occasion. Therefore, neither the Koinonia Fund or its Trustees can accept any responsibility for any resulting late mortgage repayments.
