Frequently Asked QuestionsFor Clients in England and Wales

At Novitas we provide a loan facility to help pay the legal costs of people going through divorce. We also fund TOLATA cases, collaborative, mediation and arbitration. Since our launch in 2011, Novitas has become the leading provider of such loans. The loan is provided as a facility so you just drawdown what you need, when you need it, providing fast and efficient lending.

Key features:

• Pre-approval of funding - loan approved all the way to final hearing, but interest only due on what is drawn down to pay your solicitor fees

• Rapid lending decisions – clearly defined, simple lending criteria

• Flexible timing - use the loan at any point during the proceedings

• Limited outlay - the interest and set-up fee are rolled into the loan

• A simple and transparent charging structure - regular statements will keep you informed of what you owe at any point so there are no surprises

• Alendingratethatisfixedforthewholedurationoftheloan

• No exit or early redemption penalties

Please note, the Novitas lending scheme is not ‘recommended’ by your solicitor. This scheme is one funding option potentially available to you and you should explore other sources of borrowing to ensure this is the best choice for you.

Frequently Asked Questions

Does my solicitor recommend this scheme?

No; your solicitor does not recommend the scheme. The scheme should be considered as one funding option potentially available to you. Your solicitor receives no financial incentive from Novitas.

Is the loan just to pay my legal costs?

Yes; the loan is used solely to pay your solicitors fees and any disbursements, for example a barrister or forensic accountant.

Istheloanwithmeorwithmysolicitor?

The loan contract is between yourself and Novitas. The solicitor does have obligations to Novitas as part of your loan, namely to:

• Communicate anything material that may affect the case or the repayment of the loan that happens during the case;

• Pay off the loan from any proceeds they receive as part of the settlement, before the remainder is passed to you.

Howisthisloanviewedbythecourt?

A formal loan for your costs can be better than a soft loan (i.e. a loan from friends and family). The Court may not recognise a soft loan and therefore not take these costs into account when considering an appropriate settlement.

Howmuchwillyoulend?

There is no minimum but there is a maximum which Novitas will set depending on the specific circumstances of your case. Your solicitor will be able to provide an initial view whether the amount you require will be approved by Novitas.

Isyourloanadrawdownfacility?

Yes; a loan facility will be pre-approved and you can draw down on it as required. The loan is drawn down as and when your solicitor needs funds, but only with your approval.

You do not have to use the entire loan amount and interest only accrues on the money once it is sent to your solicitor’s client account. This gives you peace of mind that funding is available but you are only paying for what you use.

Howdoestheloanprocessstart?

The first stage is a conversation with your solicitor to see if the loan is appropriate based on your circumstances. If you then wish to proceed, there is an application form for your solicitor to complete and submit online, you will approve the application via an email sent to you from Novitas once your solicitor has completed all the questions and attached the information we require.

CanIrequestamortgageillustrationbeforeproceedingwiththeloan?

Yes; if your loan is to be secured over a property, you can request a European Standardised Information Sheet (ESIS) which provides a mortgage illustration. This can be provided directly to you or to your mortgage adviser, furthermore a copy will be included in your mortgage offer pack.

What credit checks do you do?

Novitas will undertake a credit check as part of your application. If you have a CCJ or IVA we are unlikely to lend but please consult with your solicitor. If you later have a loan extension we will carry out a further credit check.

Howlongdoestheprocesstaketogettheloaninplace?

Once Novitas has received the completed loan application, we will undertake a credit check. Assuming this is satisfactory, if your loan is unsecured we will post to you your agreement document pack. You will have a 14 days cooling off period (this is a statutory cooling-off period to be compliant under the consumer credit act), during which you can cancel the loan with no costs being incurred. If you wish to proceed all paperwork will need to be returned signed together with a letter confirming you have taken independent legal advice on all the documents. We ask clients to allow 4 weeks for the process to be completed, however this may take longer if there are any queries that arise from your application or credit search.

Where the loan is secured over a property, you will be sent an ESIS and mortgage offer. There is a 7 day reflection period although you can choose to proceed at any time during the 7 days by returning your signed documentation. If you choose to do this and have been accepted, you have no right of withdrawal.

When everything is signed and returned to Novitas, you can request the first drawdown of your facility to be sent to your solicitor.

DoIhavetotakeindependentfinancialadvice?

Only if the loan is to be secured over your property. If so, you will be required to take independent financial advice from a qualified mortgage advisor before proceeding with your loan. This ensures that the Novitas product is most suitable for your needs. You will need to send a letter of confirmation from the advisor you saw confirming to Novitas you have received the advice; the loan will not be completed until Novitas receives this letter.

Do I have to take independent legal advice?

Yes; once you have the loan documents we ask you to take independent legal advice. This ensures that you understand the loan and the implications if you do not repay it. The solicitor providing the advice will send Novitas a letter confirming that you have been advised. This pro-forma letter is provided for you. If you have taken independent financial advice, you can sign a waiver if you choose to not take independent legal advice as well.

AtwhatstageofthedivorceprocesscanIgetaloan?

There must be a divorce petition as a minimum. After that, you can use the loan at any stage up to and including a final hearing.

Howmuchdoestheloancostme?

The charging structure is transparent and straight forward:

• We provide you with an agreed loan amount.

• You drawdown from that facility what you need at any point;

• You accrue interest at 1.5% per month, ONLY on the money that is actually drawn down;

• Interest rolls-up on a simple basis, so nothing to pay until the loan is settled. (A simple £500 set-up fee (or 1% of the facility if higher) is added to the loan or you can elect to pay this upfront. No minimum loan period, no exit charges, no minimum interest charge;)

• Independent legal advice (we ask you to take this on the loan agreement) this is typically circa £300 and will be charged to you by the independent solicitor. It cannot be added to the loan to keep independence. Either Novitas or your solicitor can put you in touch with an independent solicitor if you do not know one.

• Independent financial advice if you are providing a property as security for your loan, this cost will vary but we would estimate c£.500. Either Novitas or your solicitor can put you in touch with a qualified mortgage adviser if you do not know one.

Howistheinterestcalculated?

Interest is calculated on a simple basis, i.e. there is no compounding of interest. We just take the annual interest rate of 18% APR (1.5% per month), multiple by the amount of the facility you have drawn down and divide by the number of days that the money has been drawn down for. For example, if you drawdown £10,000 for 6 months, you will pay back interest on the £10,000 of £900.

You will also receive a quarterly statement so you know exactly what is owed as your case progresses.

Do I pay interest as I go along?

No; All the interest is rolled-up (as is the administrative fee if you elect not to pay upfront) so there is nothing to pay until the loan is settled. As we do not compound (i.e. charge interest on interest) there is no cost penalty for waiting until settlement; you pay the same total interest when you settle the loan as you would have if you paid it each month. Importantly, the interest is fixed for the term of the loan and is not affected by changes in interest rates or the cost of borrowing. You therefore know exactly what you will be paying for the term of your loan.

DoIhavecontroloverhowthesolicitorusesthemoney?

Yes; the loan money is sent to your solicitor’s client account. They can only draw the money against invoices you have approved. This gives you protection in the event of a fee dispute.

Whathappensifnotallthemoneydrawndownisused?

Any unused loan money is returned to Novitas and the interest calculated on a pro-rata basis.

HowlongdoIhavetorepaytheloan?

We agree a time period for each loan. In practice, this is often linked to an event such as the sale of the property or a settlement. We understand that this will need to be flexible to take account of your situation.

If your loan is secured over property, the maximum loan duration is 12 months.

CanIpaytheloanoffininstalmentsoncethecasehassettled?

The loan needs to be settled in a single payment.

Can I repay the loan early?

Yes; there are no penalties for paying the loan off early, either in a single payment or with instalments. We calculate interest daily so the shorter time you have the loan, the less you will pay in interest.

Do you need security for the loan?

Novitas will always take security over the proceeds of your divorce. In certain circumstances, Novitas will also take a charge over a UK property which will take the form of a mortgage.

Is my home at risk?

Yes; if we have taken security over the property then ultimately your home may be at risk if you fail to repay the loan.

What if I can’t provide security for the loan?

In selected cases, Novitas may choose to lend to you on an unsecured basis. In this case you will need to take insurance that Novitas has in place with a leading A rated insurer. If you default on your loan, Novitas may pass your debt to the insurer for recovery. The cost of the insurance is 11% of what is drawn down, keeping costs to a minimum. For example, if you drawdown a tranche of £5,000, you will actually draw down £5,550, the £550 difference being sent by Novitas straight to the insurer to cover the cost of the premium.

Do I assign Novitas the proceeds of my divorce settlement?

Yes; you assign the proceeds of your settlement to Novitas. For example, any lump sum payments or proceeds from a property sale are used to pay the Novitas loan before being passed to you.

Doesmyspouseneedtoknowabouttheloan?

Yes; but only once the loan is in place unless we are requesting their permission for a legal charge over an asset which needs permission in advance. There is a letter you sign and send to your spouse once the loan is in place saying that you have assigned the proceeds of the divorce to Novitas to discharge the loan, after which all proceeds are returned to you.

WhathappensifIreconcilewithmyspouse?

You are still obliged under the terms of the loan agreement even if the legal proceedings cease.

If you would like to discuss any aspect of our services, please contact:

Tel: +44 (0)1722 417 065Email: enquiries@novitasloans.co.ukWebsite: www.novitasloans.co.uk

Novitas Loans27 Barnack Business CentreBlakey RoadSalisburySP1 2LP

Novitas Loans Ltd. Registered in England No. 7959031. Registered Office: 27 Barnack Business Centre, Blakey Road, Salisbury SP1 2LP.

What happens if I change solicitor?

The loan is linked to your current solicitor as they have obligations to Novitas under the agreement. Any new solicitor would have to be approved to use the Novitas scheme (and agree to take on your case) otherwise this is a breach of the loan agreement and the loan will need to be repaid as per the terms of the loan agreement.

Can I act for myself?

Your solicitor has obligations to Novitas as part of your loan. If you choose to act for yourself you will be in breach of the loan and the loan will need to be repaid as per the terms of the loan agreement.

HowdoIgetmoreinformation?

Please speak with your solicitor or look at www.novitasloans.co.uk