Thinking about whether to take advantage of the Mortgage Diversion facility available through Kiwisaver?  Before making any decision, there are some things to consider.

After contributing to Kiwisaver for 12 months, you can apply for Mortgage Diversion to help pay off your home loan with a portion of your Kiwisaver contributions.  If elegible, you can divert a fixed amount up to 50% of your kiwisaver contributions (from the date your Mortgage Diversion request is approved) towards your home loan. Government and Employer contributions cannot be diverted.

By doing this you will benefit from paying off your home loan faster.  However, you will need to weigh this up against the fact that you’ll also be contributig less to your KiwiSaver account and, ultimately, your retirement savings.

Something else to consider is the impact on your potential matching Government contributions. You will need to meet the elegibility criteria and contribute at least $20 per week towards your Kiwisaver account after mortgage diversion payments are allocated.

From 1 November 2008, most schemes are looking to charge a $25 set up fee for mortgage diversion and this will be deducted from your Kiwisaver account on approval of your mortgage diversion request.