Quick answer
A caveat loan is short-term business finance secured by lodging a caveat on the title of a property the borrower owns, rather than registering a full mortgage. Caveat loans are used to bridge timing gaps — a business settlement, an urgent supplier payment, a tax deadline or a delayed incoming payment — and are repaid from a clear exit such as a sale, refinance or expected funds. They tend to cost more than longer-term loans.
Key points
- Short-term funding secured by a caveat on property title
- Built for timing gaps, not long-term borrowing
- A clear, realistic exit plan is essential
- Generally costs more than a registered first or second mortgage
- Security
- Caveat on property title
- Typical term
- Short — weeks to months
- Must have
- A clear exit plan
Sometimes the problem isn’t whether a business can afford something — it’s when the money arrives. A settlement date that won’t move. A supplier offering a deal that ends Friday. A customer payment that’s confirmed but three weeks away. A tax deadline that lands before the busy season’s cash does. A caveat loan is designed for exactly these gaps: short, specific and secured by property.
How does a caveat loan work?
Rather than going through the process of registering a mortgage, a caveat lender records its interest by lodging a caveat over land owned by the borrower or a guarantor. The caveat records the lender’s interest and prevents the property being sold or further mortgaged without the lender knowing. The loan is advanced for a short term and repaid in full from an agreed exit.
Amounts sit inside the same $20,000 to $5,000,000 band as our other property-backed lending, and both homes and commercial buildings can be used. As with other property-secured loans, $20k to $250k is possible same day, and up to $5m possible within 24–48 hours, when documents and checks are in order.
When is a caveat loan the right tool?
| Situation | Why a caveat loan can help |
|---|---|
| Business purchase settling before main finance is ready | Bridges until the longer-term loan completes — see buying a business |
| Supplier deal with a short deadline | Secures the deal; repaid from sales or a planned facility |
| Large customer payment confirmed but delayed | Covers costs until the money lands |
| Tax deadline before seasonal income arrives | Clears the debt; repaid from peak trading or refinance |
| Property sale under contract | Releases funds before settlement |
The common thread is a known, specific exit within a short period.
When is it the wrong tool?
- When there’s no realistic exit — you’d simply be delaying the problem
- For ongoing working capital needs — a line of credit or working capital loan fits better
- For long-term investments like a fit-out you’ll repay over years — a second mortgage or first mortgage is better suited
- When the cost of the loan outweighs the benefit of the timing
Not sure if your situation is a caveat-loan situation? Describe it in the enquiry — a specialist will tell you honestly, with no credit check to enquire.
The exit plan is everything
Lenders assess caveat loans heavily on the exit. Be ready to show:
- What will repay the loan — a sale, refinance, customer payment, settlement
- When it’s expected, with evidence: a contract, an approval letter, a remittance advice
- What happens if it’s late — a back-up plan
A strong exit makes approval simpler and protects you from needing to roll the loan over, which adds cost.
Illustrative example: A café owner has signed to buy the business next door to expand into, with settlement in ten days. Her longer-term loan is approved in principle but won’t complete in time. A short caveat loan over her investment property funds settlement on schedule, and it’s repaid when the longer-term facility settles three weeks later.
Understanding the cost
Caveat loans usually cost more than registered mortgages because they’re short, quick and carry more risk for the lender. That doesn’t make them a bad option — it makes them a specialised one. Compare the total cost of the caveat loan against the cost of missing the opportunity or deadline. Our page on fees and the total cost of finance explains how to make that comparison clearly.
What you’ll need
- Property details, a rates notice and any existing mortgage statement
- ID for borrowers and property owners
- Evidence of the exit
- What the funds are for and when they’re needed
- ABN and recent business bank statements
Using a caveat loan responsibly
- Borrow only what the gap requires.
- Keep the term as short as the exit allows.
- Line up the longer-term solution at the same time, not after.
- Read the loan terms carefully, including what happens if repayment is late.
Caveat loan or second mortgage?
The two can look similar from the outside — both use property you already own while leaving any home loan in place. The difference is mainly duration and formality. A caveat loan is the quicker, lighter-touch option for a gap measured in weeks. A registered second mortgage takes a little more paperwork but suits needs measured in months or years, and is usually the more economical choice when the timeframe is longer. If you’re unsure which you need, tell us how long you expect to need the money and how it will be repaid; that usually settles it.
Typical questions before a caveat loan is approved
- Who owns the property, and are all owners aware and agreeable?
- What’s owed on the property already, and to whom?
- What exactly is the money for, and when is it needed?
- What is the exit, when will it happen, and what’s the evidence?
- If the exit is delayed, what’s the fallback?
Clear answers to these let a lender move quickly — which is the whole point of a caveat loan.
Bridge the gap, not the problem
Tell us about the timing gap, the property and the exit. A real person will tell you whether a caveat loan is the right fit or whether another structure would serve you better. Enquiring doesn’t touch your credit file, your details aren’t sent off to a crowd of lenders, and honest detail about your exit helps us match you properly the first time. Check your bridging options.
Frequently asked questions
What is a caveat on a property?
A caveat is a notice lodged on a property's title that records someone's interest in it and stops certain dealings with the property without that person being notified. A caveat lender uses it to protect its interest while the loan is outstanding.
Why use a caveat loan instead of a second mortgage?
Mainly speed and simplicity for short-term needs. A caveat can sometimes be put in place faster than a registered mortgage, which suits urgent, short bridging situations.
What counts as a good exit for a caveat loan?
Something specific and likely: a property or business sale with a date, a longer-term loan in progress, a confirmed payment from a customer, or an expected settlement. 'We'll trade our way out' is usually not enough on its own.
Are caveat loans expensive?
They generally cost more than longer-term secured loans because they're short, quick and higher risk for the lender. That's why they suit brief, well-defined needs where the cost is worth the outcome.