Budget 09: Mortgage option too good to last

A Kiwisaver provision allowing members to direct half their retirement money towards paying their mortgages was flawed but necessary in the downturn, brokers say. Some are challenging the Government's decision, passed under urgency, to cancel the mortgage diversion clause at a time many homeowners are finding it hardest to meet their loan payments.

Nick McCorkindale, a director of the Mr and Mrs Kiwisaver fund and a mortgage broker, said few people had taken up the option - but for the few who did, it could be critical.

"Canning it, when there's so much financial stress for so many people, is not the smartest thing, to my mind," he said. "Though effectively it is a loophole, for some people it could be the difference between still saving a bit, or pulling out of retirement savings entirely."

For John Flack, 53, mortgage diversion will provide significant assistance in paying his $230,000 mortgage on a home in Auckland's Mt Albert. Flack's partner David had a stroke last year, so the couple are now reliant on Flack's income as a chef at Meccano in Mechanics Bay.

To read the full NZ Herald article click here

Posted: 31 May 2009

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