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General questions

    How does the loan work?

    This is a regulated loan between you and Novitas which you can use to cover the costs of your case, including your solicitor's fees and related disbursements.  The money is drawn down from your loan as it is needed, with your approval, and paid directly to your solicitor to reimburse them for costs associated with your case.  When your case is settled, repayment of the loan is made from your settlement.

     

    Am I personally liable for the loan?

    This is a fully recourse loan, which means that you, the borrower, are always responsible for repaying the money borrowed.

     

    Can the loan be used to cover legal costs in any probate case?

    Our loans can be used by either claimants or defendants in cases of inheritance under the Inheritance (Provision for Family and Dependents) Act 1975. We may also provide a loan for contentious probate cases that do not come under the 1975 Act, where there is a clear repayment route, e.g. where the client is also a beneficiary of the contested will.

     

    Will Novitas fund the trial (final hearing)?

    If a case is not settled and has the potential to go to trial, we may first ask for a new opinion from counsel before agreeing to fund a trial. We have the right to decline further funding (typically if counsel believes a current offer should reasonably be accepted).

     

    What is the lending criteria for a probate case?

    Our loans are available to UK residents aged 18 to 74 with a satisfactory personal credit history if the case is eligible under the Inheritance (Provision for Family and Dependents) 1975 Act. The value of the claim must be at least three times our maximum loan amount and have a 60% or more prospect of success (confirmed by a panel counsel).

    We may also consider loans that exceed our maximum loan amount or where the client's credit history is problematic, as well as adult children cases, cases that have already reached trial stage and other contentious probate cases. 

     

    Do I need to provide security for the loan?

    You will need you to sign a ‘Deed of Assignment’, which means Novitas is repaid from the proceeds of any settlement you receive before the remainder is passed to you. If you have insufficient assets in your own name, we may require you to take our insurance to cover the repayment of the loan should you be unable to repay. We advise on this at application and the cost is added to the loan.

     

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

    In selected cases, we may choose to lend on an unsecured basis. In this case you will need to take out insurance, which we have in place.  The insurance premium is 10% plus Insurance Premium Tax of 1.2% (as at 3rd December 2017) of the amount that you borrow.  If you default on your loan, we may pass your debt to the insurer for recovery.

     

    Does every solicitor have access to the Novitas scheme?

    No. Our loan service is only available through approved firms. Check with your solicitor to see if they are approved;  if they are not they can contact us about becoming an approved Novitas partner.  

     

    Does the other side need to know about the loan?

    Yes, but only once the loan is in place. There will be a letter that you sign and send to the other party’s solicitor explaining that you have assigned the proceeds of the case to Novitas to repay the loan, after which all proceeds will be returned to you.

     

    How much does the loan cost?

    Our charges are transparent and straightforward.

    The set-up fee is £500 (or 1% if the loan amount is above £50,000). This can be added to the loan or paid upfront. Interest is accrued only on the money you use, at a fixed rate of 1.5% per month (not compounded), and due only when your case is complete. Please note that this is not recoverable from the losing party.

    Initially, you will need to the pay the cost of counsel’s opinion, which is required to determine the likely merit of the case, but this can be added to your loan if approved, along with insurance, if required.

    Independent legal advice is typically circa £300 (and cannot be added to your loan). This is required to ensure you fully understand all the implications of the loan arrangements.

    If you do not have sufficient security you may be required to take out insurance. This will be 11.2% of each drawdown and will be added to the loan

    You may also take out After the Event (ATE) insurance for adverse costs. This is not mandatory and the cost will be agreed between you and the ATE insurer directly. Speak to your solicitor to find out more about this.

    There is no minimum loan period, no exit charges and no minimum interest charge."

     

    How is the interest calculated?

    Interest is fixed at 1.5% per month and calculated on a simple basis (not compounded), so you do not pay cumulative interest on interest. We take the annual interest rate of 18% (1.5% per month), multiply by the amount  you have used from your loan and divide by the number of days it has been drawn down.

    E.g. if you use £10,000 over 6 months, you will pay back interest of £900. You will receive a statement at least once every 12 months, so you know exactly what you owe as your case progresses.

    • Total loan amount: £70,000
    • Total charges:  

      £16,814, includes:
               o £250 Independent legal advice (estimate)
               o £857 setup fee (£700 setup fee plus £157 interest)
               o £15,707 loan interest (assumes full amount used in month 1)

    • Rate of interest  18% per annum (fixed)
    • Duration   15 months
    • Total payable  £86,814
    • Representative APR 19.3%

     

     

    How much will you lend and how is it paid?

    There is no minimum but there is a maximum, depending on the specific circumstances of your case. Your solicitor will be able to provide an initial view on whether Novitas will approve the amount you require. The loan is a pre-approved facility, which your solicitor can draw funds from to pay invoices, each with your approval. You do not have to use the entire loan amount and interest only accrues once the money is sent to your solicitor’s account. So, while funding is always available, you only pay for what you use.

     

    Is it in my solicitor’s interest for me to use a Novitas loan?

    Your solicitor is independent so receives no financial incentive from Novitas and can not recommend us to you. Our loan service is a funding option available for you to consider, and only you can decide to go ahead.

     

    Is the loan regulated?

    The loan is regulated under the Consumer Credit Act 1974.

    Is the loan with me or with my solicitor?

    The loan contract is between you and Novitas. Your solicitor has an obligation to communicate to us any material facts that may affect repayment of the loan during your case and pay off the loan from any proceeds received as part of your settlement. The remaining amount will be passed on to you.

     

    What can the loan be used for?

    The loan is used solely to pay your solicitors fees and any disbursements, for example barrister or expert costs. We fund all or part of a case. You may decide to use Novitas for part of your costs and agree with your solicitor a different funding arrangement for the balance.

     

    What does the insurance cost?

    The insurance premium is 10% plus Insurance Premium Tax of 1.2% (as at 3rd December 2017) of the amount that you borrow. For example, if you borrow £50,000 for your legal proceedings, you will actually borrow £55,600.

     

    Am I required to take out ATE (After the Event) insurance?

    You will need to discuss this with your solicitor. There is no requirement under the loan to have ATE insurance (to cover your opponent’s costs if your claim is unsuccessful), but we do not accept any liability for adverse costs.

     

    What happens if I agree to the loan but never proceed?

    Outside of your cooling off period, once you have been accepted and confirmed that you wish to take out the loan, you will be charged the administration fee of £500 or 1% of the facility if higher than £50,000 if you do not then proceed.

     

    What happens if my solicitor is suspended from practice by SRA during term of loan?

    You can cancel your loan facility or transfer to another solicitor.

     

    Where can I find more information?

    Speak to your solicitor to find out more about Novitas loans [or visit www.novitasloans.co.uk]. Please note that these FAQs are intended for information only and you should not reply on them solely to make your decision about whether to enter a loan agreement.  

     

    Which counsel (barrister) can I use for provisional advice?

    This is at the discretion of you and your solicitor. You will need to pay for a barrister’s initial opinion on your case as there is no guarantee it will be approved for a loan. Some barristers may act on a deferred fee basis and if you are approved, the cost can be added to the loan and repaid to you. This barrister can act for you after the initial advice, or you and your solicitor can instruct another barrister.

     

    What is the loan application process?

    If, after an initial consultation, your solicitor thinks you are eligible, they will prepare a draft statement. A barrister will then review it and provide an opinion (which is owned by you) on the merits of your case. Your solicitor sends us the statement, opinion and online application for approval. If approved, you will need to get independent legal advice to ensure you fully understand all the implications of the loan, before signing and returning the loan agreement.

     

    At what stage can I apply for a loan?

    You can apply for a loan at any stage.
     

     

    Can I apply for a loan if I am acting for myself?

    No. Your solicitor accepts obligations to Novitas, so you need to be represented to use our loan service. If you subsequently choose to act for yourself you will be in breach of the loan agreement and will need to make repayment immediately.

     

    Do I have to take independent legal advice?

    Yes. Once you have the agreement pack we ask you to take independent legal advice to ensure you understand the loan and the implications if you do not repay it. The solicitor giving this advice will provide a letter for Novitas confirming that you have been advised (we will provide a standard letter template). You pay for this advice yourself; it cannot be paid from your Novitas loan. Either Novitas or your solicitor can put you in touch with an independent solicitor if you do not know one.
     

     

    How long will it take to get the loan in place?

    Once you have approved the submission made by your solicitor, it usually takes three to four weeks to get the loan in place. It may take longer if queries arise from your application or credit search. Once we have approved your application, we send you our agreement pack and you have a 14-day cooling off period in which you can cancel the loan (in line with the Consumer Credit Act). If you wish to proceed, you will need to sign and return the documents in the agreement pack, along with a letter confirming you have taken independent legal advice. Once we have received these, your solicitor can make requests to draw funds from your loan with your approval.

     

    What credit checks do you do?

    We carry out standard credit checks as part of the application, known as a soft check, which should not affect your credit score. If you have a County Court Judgement or Individual Voluntary Agreement to pay off an existing debt we are unlikely to lend, but please consult your solicitor. If after four months you do not use your Novitas loan, or you later require a loan extension, we will carry out a further credit check.

     

    What do I have to sign?

    You will need to sign the following:

    • Consumer Credit Act regulated loan agreement
    • Adequate Explanations document, which contains the information you need to be aware of when entering a finance agreement
    • Deed of Assignment over proceeds so any lump sum payments are used to pay off the loan before the remainder is passed to you.

    You will also need to provide an authorisation letter permitting your solicitor to communicate with Novitas, and your letter of independent legal advice.  "

     

    Does the loan repayment come from the proceeds of my settlement?

    Yes, you assign the proceeds of your settlement to Novitas by way of a Deed of Assignment when you enter the loan agreement. For example, any lump sum payments or proceeds from a property sale are used to repay the loan before being passed to you.

     

    What happens if I don’t use all of the loan?

    Any unused loan money is returned to Novitas and interest calculated on a pro-rata basis (i.e. applied only to the amount you have used).

     

    How long do I have to repay the loan?

    We agree a time period for each loan, often based on an event such as the sale of a property or a settlement. While we may put a time period of 12 months from the date of the agreement on the loan contract, we understand that this needs to be flexible and will roll on the loan on a 30-day basis according to your individual situation.

     

    Can I pay the loan back in instalments?

    No, the loan needs to be settled in a single payment once your case has been settled.

    Can I repay the loan early?

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

     

    Do I pay interest as I go along?

    No, you do not pay any of the interest until the loan is settled, at the end of your case. As we do not compound the interest there is no cost penalty for waiting until settlement, so 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, so you know exactly what you will be paying.

     

    How do I pay the insurance?

    The cost is simply added to the loan. Each time funds are drawn from your loan, the cost of the insurance premium plus Insurance Premium Tax is added. This means you are only paying insurance on what you use rather than the whole loan amount, to keep the cost to a minimum.

     

    If I have insurance, do I still have to repay the loan?

    This depends on the circumstance of your insurance claim, and you may still have an obligation to repay the loan.

     

    Can Novitas ask for repayment at any time?

    Repayment is at the end of your proceedings, but if you breach the loan agreement we may ask for repayment of the loan at any time. This can include, dis-instructing your solicitor without our agreement or failing to follow advice from your solicitor in any material way.

     

    Can I change solicitor or stop proceedings?

    The loan is linked to your current solicitor, so if another solicitor takes on your case we would have to approve them before transferring the loan, otherwise you will be in breach of our agreement and the loan will have to be repaid immediately.

    There is no charge for transferring the loan. If you repay the loan you can apply for a new facility with a new Novitas approved solicitor.

    If proceedings are stopped you will be liable to repay what you have drawn down.

     

    Can Novitas stop funding during the case?

    Yes, there are circumstances which may mean we stop any further drawdowns from your loan, including:

    • disclosure of subsequent material facts that adversely affect the case
    • your solicitor leaving your case
    • your solicitor not meeting the undertakings they give to Novitas
    • any of your own behaviour that gives rise to concern about recovering the loan

     

     

    Do I have control over how the solicitor uses the money?

    Yes. Your solicitor can only draw the money against invoices you have approved, so in the event of a disputed fee, you are protected. You will be emailed each time an amount is drawn down and can contact your solicitor directly if you have any queries.

     

    How often can I make a draw down from the loan

    The loan can be drawn down as many times as your solicitor requires, up to the limit of your loan.