In Australia, there are many different finance options to take advantage of, with many lenders vying for your business. Whether it be home loans, personal loans, or even applying for a credit card, every single day, Aussies are seeking finance.
One type of loan that may not be as common as those mentioned above but a loan with certain advantages is the caveat loan. Let’s look at caveat loans, their advantages, and where you can get fast caveat loans in Australia.
What exactly is a caveat loan?
One area that’s quite often a little fuzzy with some people is whether a caveat loan is the same as a mortgage loan. It’s not. The main reason being is that funding can happen in just a matter of days from the date of application, as the caveat can be lodged immediately on the title. Other terms often used to describe a caveat loan are ‘equitable mortgage’ or ‘unregistered second mortgage.’
These are short-term loans secured against the value of the equity you have accumulated in your current property. Therefore, to apply for a caveat loan, you must already own property. What does the caveat actually do? Being lodged behind the title of a current mortgage, it’s a type of injunction on the mortgage and the homeowner does not require permission from the bank to do this. If you do happen to take out a caveat loan, you are forbidden to settle on the property without the express consent of the provider of the caveat loan.
What are the benefits of a caveat loan?
Caveat Loan – The Benefits
One of the greatest advantages of a caveat loan is the speed with which you can receive funds as caveat loans can be applied for, approved, and settled often within a few days. In addition, minimal documentation is usually required to secure a caveat loan, making it easier and faster than other loan types. Caveat loan terms are adjustable and can usually be negotiated for anywhere from one month to three years. Once you have repaid the loan, the caveat on your property is lifted immediately with minimal fuss and red tape.
One of the greatest advantages of a caveat loan is the speed with which you can acquire funds as caveat loans can be applied for, approved, and settled often within a few days. In addition, minimal documentation is usually required to secure a caveat loan, making it easier and faster than other loan types. Typically, you get some flexibility with caveat loan terms, with repayments as long as 3 years or as little as 1 month. Once you have repaid the loan, the caveat on your property is lifted immediately with minimal fuss and red tape.
Common uses for a caveat loan
Caveat loans are commonly used as short-term loans to bridge the gap between the sale of a property and the purchase of a new property.
Buying and selling property is not the only occasion where you might consider taking out a caveat loan. You can use those funds to perform home improvements that can help sell your property faster and for a higher price. Caveat finance can also be utilized for residential development projects to cover the cost of construction.
Business owners can also take advantage of the caveat loan option when cash flow needs to be bolstered. This could cover a gap in invoicing and receiving payment, expanding business practices, or even investing in a business opportunity when it’s on. Business owners can also use the funds from a caveat loan to purchase stock or business equipment or even to cover something like a tax bill or other business expense.
How to find a lender for caveat loans Australia
Numerous lenders in Australia will offer caveat loans. It’s best to take your time and shop around for the right lender (and deal) for you (keeping in mind that the lender doesn’t necessarily have to be the same lender who gave you a home loan).
Once you’ve settled on a couple of potential lenders, peruse their websites, read their terms and conditions, and also seek out reviews about the lender from actual customers. A good example is Mango Credit reviews.
Before making any decisions, be sure to fully understand their caveat loan offer and what your responsibilities are.
Caveat loans have many handy uses, and getting approval rapidly is a bonus. So whether you’re selling a property, want to perform home renovations, or need funding for your business, a caveat loan may be worthwhile considering.
Yanis Derums is the Founder and Director of Mango Credit – a leading private lender that specializes in providing bridging loans for personal use and business short-term loans for commercial and/ or investment purposes. Yanis has extensive experience with financial analysis, the credit assessment, product structuring, and general business management.