Caveat loans for business owners

If your business needs money in days and you own property with equity in it, a caveat loan is usually the quickest private structure there is. It’s also the one most often misunderstood, so here’s how it really works, what it costs and where people get caught out.

How a caveat loan works

You borrow from a private lender for a business purpose. Instead of registering a mortgage, the lender lodges a caveat on the title of your property. The caveat records that the lender claims an interest in the land, which in practice means you can’t sell or refinance without the lender knowing and being repaid.

Because nothing is being refinanced and there’s no new registered mortgage, the paperwork is lighter and the timeline shorter. A typical caveat loan looks like this:

1. You enquire with the amount, purpose, property and deadline
2. The lender reviews a title search, an estimate of value and your exit plan
3. Indicative terms are issued, often within a day
4. A valuation is ordered, sometimes a desktop or kerbside one for smaller amounts
5. Loan documents are signed, usually after independent legal advice
6. The caveat is lodged and funds are released

For smaller loans on clean titles, settlement on the same day is possible. Larger amounts or complex titles take longer.

When a caveat loan makes sense

Caveat loans are built for urgency and short terms. They suit owners who:

• need to pay a tax debt, creditor or settlement within days
• already have a mortgage and don’t want to disturb it
• have a clear exit coming, such as a sale, a refinance or a large payment
• need a modest amount relative to the property’s value

They’re a poor fit when the need is long-term, when equity is thin, or when there’s no realistic way to repay inside the term. In those cases a second mortgage or a private first mortgage is often the better structure.

Caveat loan vs second mortgage

	Caveat loan	Second mortgage
How it’s secured	Caveat lodged on title	Mortgage registered on title
First lender’s consent	Usually not required	Often requested, sometimes required
Speed	Fastest	Fast, but more steps
Typical term	Weeks to 12 months	3 to 24 months
Typical size	Smaller, relative to equity	Can be larger

Our comparison of the three structures goes deeper if you’re torn between them.

The state rules matter

Every state runs its own titles office and its own caveat rules. Most of the time this is the lender’s problem, not yours, but it’s worth knowing that:

• caveats can lapse or be challenged through a lapsing notice process, with different timeframes in each state
• in Queensland, a caveat protecting an unregistered mortgage is generally subject to lapsing rules, which is why many lenders there register a mortgage instead
• in some states the caveat must be supported by a clear written charge in the loan documents

We cover the detail in our Queensland caveat guide and on each location page. The practical point is that the right structure depends partly on where your property sits.

What a caveat loan costs

There’s no single price, and we never quote rates on this site. What you’ll pay is built from interest (often charged monthly), an establishment fee, the valuation, legal costs and the cost of lodging and withdrawing the caveat.

Two things to check before you sign:

• Minimum interest period. Some caveat loans charge a set number of months even if you repay sooner.
• Default terms. Know exactly what happens, and what it costs, if you’re a few days late.

Use the caveat loan calculator to enter the dollar costs from an offer and see the total, the net funds and the payout figure if you exit early.

Risks to understand

A caveat loan is secured debt. If you don’t repay, the lender can take legal steps to recover what it’s owed, which can end in the property being sold. The main risks are:

• the exit runs late, such as a sale that doesn’t settle or a refinance that’s declined
• costs mount on extensions if the loan goes past its term
• your existing mortgage terms are breached by the new security

The way to manage all three is the same: borrow only what you need, plan a buffer of time and money in the exit, and read the documents with your solicitor.

Check if a caveat loan suits your deal

Tell us the property, what’s owed on it, the amount you need and the date you’re working to. A person on our desk will tell you, usually the same day, whether a caveat loan, a second mortgage or something else entirely fits better. There’s no credit check when you first enquire, and your file isn’t shopped around a panel of lenders.

Accurate answers help us match you properly first time. See if you qualify or call our Brisbane desk. If you’d like to check your equity first, the second mortgage calculator works for caveat loans too, and then you can send us the details.