Quick answer
A caveat loan is secured by a caveat lodged on a property's title, which gives the lender a recorded interest without the full process of registering a mortgage. Property-secured business loans run from $20,000 to $5,000,000, and larger amounts can sometimes move within 24 to 48 hours. It is for short, planned bridges, and the property is at risk.
Key points
- A caveat is a notice on the title that records a lender's interest in the property.
- It is typically used for short, planned bridges where time is tight.
- Amounts run from $20,000 to $5,000,000, against residential or commercial property.
- A clear exit (repayment, refinance or sale) matters more here than anywhere else.
Some funding needs cannot wait for a full property process. A supplier discount that expires on Friday, a tax deadline that will not move, a contract that must be signed this week. When the amount is larger than an unsecured facility can reach and the clock is loud, a caveat loan is one of the structures lenders use.
What is a caveat loan?
A caveat is a formal notice lodged on a property’s title. It tells anyone searching the title that someone claims an interest in the property. In a caveat loan, the lender’s interest in your property, arising from the loan agreement, is recorded by lodging a caveat. That gives the lender security without having to go through the process of registering a mortgage first.
The rules and lodgement process are set by each state and territory’s land titles office, so details vary. A lending specialist can explain how it works for the state your property is in.
Why would a business use one?
Caveat loans sit within the wider family of property-backed business loans, and they are best understood as the quick, short-horizon member of it.
Mostly for speed and for short, defined needs. Typical uses include:
- A bridge to a known event, such as a property sale, a payment or a refinance that is weeks or months away.
- A tax payment with a firm deadline.
- A time-limited opportunity, such as buying stock at a discount or securing a contract.
- A stop-gap while a longer-term loan is arranged.
Larger property-secured amounts can sometimes move within 24 to 48 hours, depending on the documents and the property. That is a possibility, not a promise, and it relies on your paperwork being in order.
How big can a caveat loan be?
Property-secured business loans run from $20,000 to $5,000,000, against residential or commercial property. The amount depends on the property, any debt already against it and the purpose. Your equity is the starting point. If you want a rough figure, use the What can I borrow against? quiz, which estimates equity from your property value and what is owed.
How does it compare with a second mortgage?
| Feature | Caveat loan | Second mortgage |
|---|---|---|
| Security | Caveat on the title | Registered mortgage behind the first |
| Typical use | Short, urgent bridge | Medium-term funding |
| Speed | Can be faster | Usually slower to set up |
| Exit | Needs a clear plan, often short | Needs a plan, usually longer |
Some arrangements start with a caveat and later convert to a registered second mortgage when more time is needed. Read the second mortgage page for how that second structure works.
What are the risks?
Be direct about these. The property is at risk.
- Enforcement. If the loan is not repaid as agreed, the lender can enforce its rights. That can mean the property is sold. Business.gov.au says a secured lender can take the security to cover losses.
- Short horizons. A caveat loan usually has a short term. If the exit slips, you can be left with a tight deadline and few options.
- Cost. Fast, short-term, security-based funding can cost more than slower alternatives. Ask for the total cost of finance in dollars, including fees.
- Other owners. If the property has multiple owners, they all need to understand and agree.
- Pressure. Urgency can lead to rushed decisions. Take advice, even if only for an hour.
Business.gov.au also lists free help for owners in financial difficulty, including the Small Business Debt Helpline on 1800 413 828.
How do I plan the exit?
Before you borrow, write down how the loan will end:
- Repay from a known source: a property sale settlement, a customer payment, a tax refund.
- Refinance into a longer-term, lower-cost structure once the pressure is off.
- Sell an asset that is not central to the business.
An illustration with no real borrower: an owner needs $400,000 for 90 days while an investment property sells, with settlement scheduled in 75 days. The exit is the sale proceeds. If the sale falls through, there needs to be a second exit, such as a refinance. A plan with only one exit is a hope.
What should I have ready?
- The property address and title details.
- Mortgage statements for any existing debt.
- Identification for all owners.
- Recent business bank statements and your ABN or ACN.
- A clear note on the purpose, the amount and the exit.
- Any contracts or deadlines that explain the urgency.
When is a caveat loan the wrong tool?
It is the wrong tool when the need is long-term, because the structure is designed for short horizons. It is the wrong tool when a cheaper, slower option would do and there is no real deadline. And it is the wrong tool when the repayment plan relies on something uncertain, such as a hoped-for sale at a particular price.
If you are not sure, compare it with a second mortgage or a smaller unsecured facility. The point of the comparison is not to talk you out of speed, but to make sure you are buying speed when you actually need it. Take independent legal advice before the caveat is lodged, because the consequences of the document are real.
Next step
If the clock is running and the property is there to support it, tell us what is happening. Share the property, what is owed, the amount, the deadline and the exit. A lending specialist reads it and rings you. There is no credit check just to ask, and your details are not sprayed around a crowd of lenders.
Accurate answers (the real property, the real deadline and the real exit) let us tell you honestly whether a caveat loan is the right shape. See if you qualify.
Frequently asked questions
What is a caveat?
A caveat is a notice lodged on a property's title to protect an interest in it. A caveat loan uses that notice as the lender's security. The rules and forms are set by each state or territory's land titles office.
Is a caveat loan the same as a mortgage?
No. A mortgage is a registered security interest. A caveat records a claimed interest on the title. Some arrangements later convert to a registered mortgage, which a lending specialist can explain.
How fast can a caveat loan move?
Larger property-secured amounts can sometimes move within 24 to 48 hours. That depends on documents, the property and the parties involved, and it is never a promise.
What are the risks?
The property is security. If the loan is not repaid, the lender can enforce its rights, which can mean the property is sold. Take independent legal advice and plan the exit before you start.
Do I need good credit?
Past credit issues and ATO debt are considered case by case. The security carries a lot of the weight.