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Metropolitan’s Help to Buy redemption service gives Cherry a good feeling

PC4 8003

Londoner Cherry Yogi has just managed to make her life a little bit less complicated. She has just paid off her Help to Buy equity loan with the help of Metropolitan’s HousingOptions Plus service, which deliver post-sales services to home owners in England who had bought their first home with a government-funded equity loan scheme.

In September 2012 Cherry purchased her one bedroom apartment in Wembley using the Government-funded Help to Buy equity loan scheme which enabled her to buy 25% of her home’s value without the help of a mortgage, acting as a deposit and satisfying the very stringent mortgage market conditions at the time.

Cherry paid £185,000 for her one bedroom apartment built by Countryside Properties with a deposit of 5% from her savings and £37,000 (20%) from the Help to Buy scheme. The loan is interest free for five years but then is subject to interest fees after that period.

The way that the Help to Buy equity loan works is that if you sell your property and the ‘Help to Buy’ loan you bought it with represented 20% of the property purchase price when you bought, then you will have to repay 20% of the current market value at the time of selling or when you ‘redeem’ (pay off the loan). The value is established by a RICS registered surveyor who will inspect your property and gain other valuations from the local property market to compare it against and arrive at a fair price.

As she approached three years of home ownership, Cherry began to consider her next steps:

“I was starting to think about remortgaging as my fixed-rate mortgage was coming to an end. I wanted to simplify the process as not all lenders will deal with remortgages involving Help to Buy. I had been saving hard and I wanted to pay off the extra loan, then shop around for the best interest rate on my mortgage.

“I sat down and read through the paperwork and I contacted Metropolitan to get the ball rolling. Metropolitan were really helpful  and explained that it would take about the same time as buying a property to complete all the legal work involved in transferring the and registering the interested parties in my property. They ask you whether you are taking a loan or paying it off in some other way .If you were remortgaging, all the work would then be done by your solicitor and mortgage broker.”

From start to finish, the redemption process took Cherry just under two months, from the point of sending her valuation to the HousingOptions Plus team at Metropolitan in April 2015, to completion in early June.

Whilst the process was relatively quick, one of the biggest challenges for Cherry was to keep up with rising house prices in London, as Cherry explains:

“I had to appoint a Solicitor and pay for a surveyor to come out and give a market value on my home. The valuation cost £200 and was then used as the basis for all the calculations. The new valuation was £250,000 which meant I would need to repay £50,000 to pay off the loan (20% of the market value). This seemed like a big increase in what I would have to pay back, but this was because property prices had risen so dramatically. I decided to go for it as the market seemed to be rising fast and I would have to pay even more if I left it any longer. I had a lot saved up but not all of it so I applied to the Bank of Dad for the rest!”

Metropolitan’s HousingOptions Plus service offers a range of customer support services, from help and information packs and a transaction progress tracker available online at myfirsthome.org.uk  through to a customer helpline – Cherry took a proactive approach to moving things forward:

“I had to show three months payslips and go through the general identity checks, but other than that it was pretty straightforward. I am not the sort of person who sits back and waits for things to happen so I rang Metropolitan on a weekly basis until the document that proves that there is no extra loan outstanding on the property came through.”

Now that Cherry owns outright with a mortgage, she’s begun to map out her future:

“It’s a good feeling that my home is now owned by me and the mortgage provider. It means if I want to go off and work overseas and rent it out it will be much easier. The Help to Buy loan was useful at the time but it is nice to be a little less in debt!”

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