Caveat loans for business

A caveat loan is the lightest way to borrow against property for a business purpose. Instead of registering a full mortgage, the lender lodges a caveat on your title. That single difference is why a caveat loan can often be approved and paid out while a bank is still booking its valuation.

It’s a tool for short, specific needs: a tax bill that has to be dealt with this week, a deposit on a business purchase, stock for a contract you’ve already won, or a gap before a sale or refinance completes. It’s not designed to be held for years.

How a caveat loan works, step by step

1. You tell us the property and the need. Address, rough value, what’s owing on it and what the money is for.
2. The lender checks title and value. An electronic title search shows who owns it and what’s already registered. Value usually comes from a desktop or kerbside valuation for smaller amounts.
3. Everyone on title signs. Every registered owner has to agree, and most lenders use electronic signing.
4. The caveat is lodged and funds are released. The lender lodges its caveat with the land titles office and pays out, often directly to the person you owe.
5. You repay at the end of the term. From a sale, a refinance, a contract payment or business income. The lender then withdraws the caveat.

Who caveat loans suit

• Owners who need between $20,000 and a few hundred thousand dollars quickly and own property with equity.
• Businesses whose books, tax returns or credit file would slow an unsecured or bank loan down.
• Anyone with a dated, provable way out: an exchanged sale contract, an approved refinance waiting on paperwork, a progress payment or a known receivable.

They suit people less well when there’s no clear end point. If you can’t say how and when the loan will be repaid, a longer structure such as a second mortgage or a private mortgage is usually safer.

What a private lender looks at

Question	What they want to see
Is there enough equity?	Property value minus every existing loan, with a buffer
Who owns it?	Every name on title, available to sign
What’s already on title?	Existing mortgages, other caveats, any restrictions
What’s the money for?	A business purpose, with an invoice, notice or contract
How will it end?	A dated exit with evidence behind it

Business paperwork matters far less than it would at a bank. Many caveat lenders don’t need tax returns at all, as long as the security and the exit hold up.

Caveat or second mortgage?

Both leave your existing home loan in place. The practical difference is formality and term. A caveat is a notice, so it’s quicker to lodge and suits terms measured in weeks or months. A second mortgage is a registered security behind your first lender, which suits longer terms and larger amounts. Our guide comparing second mortgages and caveats goes through when each makes sense.

Costs to understand before you sign

Caveat loans are short and fast, and they’re priced for it. Expect to see some combination of an establishment fee, a valuation fee, legal and lodgement costs, and interest that may be capitalised or prepaid for the term. Extensions, if you need one, usually carry their own fee. Ask for the total amount repayable in writing and compare it with the cost of the problem you’re solving, such as ATO penalties, a lost contract or a failed settlement. Use our property equity checker first to see whether your equity is likely to be enough.

An illustrative example

A Geelong joinery business needs $95,000 within three days to pay an ATO debt before a director penalty notice deadline. The owner’s home is worth around $980,000 with $520,000 owing. Both owners can e-sign the same afternoon. A signed contract to sell a vacant block they also own settles in ten weeks. A private lender lodges a caveat over the home, pays the ATO directly, and is repaid from the block sale. Illustrative only.

Risks worth saying plainly

Your property is the security, so if the loan isn’t repaid the lender can take steps to recover it. Short terms can feel comfortable on day one and tight by month four. Keep the amount to what’s needed, choose a term with room past your expected exit date, and get independent legal advice. Every owner on title should understand what they’re signing. If anything feels rushed or unclear, ask before you sign, not after.

Ask what your property can support

Tell us the address, what’s owed, what you need and how you’ll repay it. There’s no credit check to enquire, your details aren’t blasted to a list of lenders, and one experienced person reads your file and calls you back. The more accurate your answers, the quicker a caveat can be lodged. Start your enquiry.