What is a Caveat Loan?

A Caveat Loan (also referred to as a short-term second mortgage) loan, is a fast settling loan. This loan type is commonly secured against the valuation of your asset or property, such as:

  • Your house
  • Your unit
  • Your block of land, or
  • Your commercial property

In contrast to conventional forms of finance, the Caveat loan needs to be established quickly (i.e. within 24 hours from the time the Caveat loan application is first lodged).

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Who can use a Caveat Loan?

If you fit any of the following categories and you find yourself experiencing a cash flow crisis (i.e. you need cash quickly for any reason) then a Caveat loan is the right loan for you:

  • A "Business Owner."
  • A "Property Developer", or
  • An "Investor."

It is important to note, this facility is not offered to consumers who seek to use the funds for purposes to which the National Consumer Credit Protection (NCCP) Act may apply. You should not apply for a Caveat loan if you intend to use the facility for any of the following purposes:

  • Domestic purposes
  • Household purposes
  • Personal purposes, and
  • Investments in residential property

What are the Benefits of a Caveat Loan?

If you are a business owner, property developer or investor and you are experiencing a cash flow crisis a Caveat loan will provide you with the following benefits:

  • Enable you to obtain funds and approvals quickly to meet your immediate needs
  • Enable you to fund business growth with increased working capital
  • Provide you with immediate access to equity currently being held by you in the property or asset being offered as security
  • Enable you to commit to business opportunities that are too good to miss out
  • Enable you to secure funds for construction or development projects
  • Enable you to obtain funds even though you may have a bad credit report
  • Enhance the day to day business cash flow, and
  • Allow you to have flexible access to your funds

What should I consider when Applying for a Caveat Loan?

There are a number of factors you should take into consideration when applying for a Caveat loan, such as:

  • If you have a first mortgage on the property that you are contemplating to provide as security for this loan type, the lender/credit provider will need to obtain consent and a deed of priority from the first registered lender/credit provider appearing on the title of the property
  • Some lenders/credit providers prefer to lend to business entities and companies only as a borrower
  • You will need to have your accountant and lawyer readily available to provide you with required information and documents as per the lender/credit provider requirements.
  • This loan type attracts a high interest rate and also has a high setup cost; hence you have to ensure that you will use these funds, in a way, that will provide you with the best rate of return and would bring you a good profit
  • The lender/credit provider will value all properties being offered as security by you, and you are required to pay the valuation fees up front

How can I get Approval for a Caveat Loan?

To get approval for a Caveat loan, you will only need to meet the following lender/credit provider requirements:

  • Have access to equity in owned property (i.e. your residence or your business)
  • Have a reasonable exit strategy in place (i.e. you must be able to show the lender/credit provider how you plan to payback the caveat loan), such as:
    • Selling your house
    • Refinancing your mortgage, or
    • Using the profit from a business sale

How is a Caveat Loan Repaid?

The repayment of the Caveat loan is achieved through refinancing, sale of assets, receipt of payments due, or increased cash flow. A Caveat loan is taken out for a period of between 1 to 12 months and the loan:

  • Must be repaid at a predetermined time (i.e. this is often referred to as an exit strategy)

Your Customised Caveat Loan Solution

Our team of professionally qualified finance brokers has access to numerous lenders/credit providers. They are experts in customising suitable Caveat loan finance package solutions and they will:

  • Structure your Caveat loan to suit your individual needs and budget
  • Help get you the best Caveat loan you want in the quickest possible time and without the hassle of running around trying to find your own finance
  • Liaise with the numerous lenders/credit providers to arrange the best possible Caveat loan solution for you, and at the right price

Contact Singh Finance Today

If you are currently considering applying for a loan, or for any other purpose and for an obligation free assessment. Please contact us on 0424 190 908 or visit our website and select "Enquire Online Now" by completing our "Contact Us" page, and one of our expert finance brokers will contact you, to make an appointment at a time and place convenient to you.