FAQs For Clients
- > Is the loan with me or with my solicitor?
- > Does my solicitor make money from me taking a loan?
- > How does the loan process start?
- > How long does the process take to get the loan in place?
- > How is this loan viewed by the court?
- > How much does the loan cost me?
- > How is the interest calculated?
- > Do I pay interest as I go along?
- > Can I pay the loan off in instalments?
- > How long do I have to repay the loan?
- > Can I extend the loan?
- > Can I repay the loan the early?
- > Do you need security for the loan?
- > Is my home at risk?
- > Who registers the security over the asset?
- > Do I assign Novitas the proceeds of my divorce?
- > Does my H/W need to know about the loan?
- > Is the loan just to pay my solicitor’s fees?
- > Where does the money get sent to?
- > Do I have control over how the solicitor uses the money?
- > What credit checks do you do?
- > What happens if I reconcile with my husband / wife?
- > What happens if I change solicitor?
- > Is the loan regulated?
- > Do you have a minimum/maximum lending amount?
- > At what stage of the divorce process can I get a loan?
- > Do I have to take independent legal advice?
Is the loan with me or with my solicitor?
The loan contract is between yourself and Novitas. The solicitor does sign an undertaking with Novitas (non-financial) however, so we must have met and approved your solicitor before granting the loan.
Does my solicitor make money from me taking a loan?
No; your solicitor receives no financial incentive from Novitas.
How does the loan process start?
The first stage is a conversation with you / your solicitor to understand the facts of the case. If we think we can loan, there is a short application form to complete. This can be sent to you or downloaded from this website.
How long does the process take to get the loan in place?
Once we have received the completed loan application form and associated documents (listed in the application form), we will issue an offer in principle. The next stage is to meet and go through the legal agreements. After that meeting, there is a 7 day wait before you are sent the actual legal agreement to sign (to be compliant under the consumer credit act). The whole process can be as quick as two weeks, but more likely takes about 4 weeks.
How is this loan viewed by the court?
Having a formal loan for your costs is often better than a soft loan (i.e. a loan from friends and family) as the courts will recognise a Novitas loan as part of your liabilities.
How much does the loan cost me?
There are no costs or obligations until the loan contract is signed. When you take out the loan there are three charges (all of which are rolled-up):
- A one-off set-up fee of £500 or 1% of the loan amount if higher
- An interest charge calculated as a percentage of what you borrow. We will confirm the interest rate with you once we agree the loan. 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 contract.
- Land Registry fee – cost to apply for a First/Second Charge or a Notice, all fees vary dependent on the loan amount and the type of charge taken but is no higher than £150
How is the interest calculated?
Interest is calculated on a simple basis, i.e. there is no compounding of interest. We just take the annual interest rate we agree with you, multiple by the loan amount and divide by the number of days that you have the loan for.
Do I pay interest as I go along?
All the interest is rolled-up (as is the set-up fee and the Charge administration fee) so there is nothing to pay until the loan is settled. Because we do not compound there is no cost penalty for waiting until settlement.
Can I pay the loan off in instalments?
No, the loan needs to be settled in a single payment.
How long do I have to repay the loan?
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. So whilst we will put a time-period of say 6 or 12 months in the loan contract, we understand that this will need to be flexible to take account of your situation.
Can I extend the loan?
The loan will have an agreed term. We understand that it can be hard to predict when, for example, a house will sell to repay the loan. We aim to be flexible in understanding your specific situation and having a practical approach to when the loan can be repaid.
Can I repay the loan the early?
Yes. There are no penalties for paying the loan off early. 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?
We look to take security where possible over UK assets. This is usually a property but may be shares or land. We will discuss the options with you at the start and once the loan is repaid any charge is immediately removed. If a property is in joint names, we will need the consent of the other party for a legal charge. If this is not forth coming, we may also consider an equitable charge which does not need the consent of the other party.
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
Who registers the security over the asset?
Novitas will undertake the registration. If there is a mortgage, you / your solicitor will need to contact the mortgage company to get written permission for Novitas to add a charge behind theirs on the property.
Do I assign Novitas the proceeds of my divorce?
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.
Does my H/W need to know about the loan?
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 H/W 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.
Is the loan just to pay my solicitor’s fees?
The loan is used solely to pay the solicitors fees and any disbursements.
Where does the money get sent to?
The loan monies are sent to the client account of your solicitor.
Do I have control over how the solicitor uses the money?
Yes; the loan money is sent to your solicitor and resides in their client account. They can only draw the money against invoices you have approved. This gives you protection in the event of a fee dispute.
What credit checks do you do?
We ask you to provide a credit check from, for example, Experian. These can be done on-line and are one of the documents we ask you to provide with your application form.
What happens if I reconcile with my husband / wife?
You are still obliged under the terms of the loan agreement even if the legal proceedings cease.
What happens if I change solicitor?
The loan is linked to your current solicitor as they have obligations to Novitas under the agreement. If you wish to change solicitor we would need to be comfortable with the new solicitor before allowing the loan to be transferred.
Is the loan regulated?
Yes; the loan is regulated under the consumer credit act and your rights are fully documented in the loan agreement.
Do you have a minimum/maximum lending amount?
We have no maximum. Rather, when deciding on the amount to lend, we look at the specific situation of each case and make a decision on the amount we are comfortable lending.
At what stage of the divorce process can I get a loan?
We are happy to look at very early stage lending, such as pre-Form E or at the First Appointment stage. We look at each situation and make a decision based on the facts at that point, regardless of where in the divorce proceedings you are.
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.