How Caveat Loans Could Correct a COVID-19 Cashflow Crisis

By: Aaron Robbins0 comments

With banks tightening their lending policies during the pandemic, many people turned to private lending and the flexibility of Caveat Loans.

What if we told you that your COVID cash flow crunch could be corrected in under 24 hours using Caveat Loans?

Believe it or not, existing property owners with sufficient equity can access almost immediate funds to help get them through a short term cash struggle without complicated paperwork or needing to sell off any assets.

At DFS, we are experienced in caveat lending and have sourced short term Caveat Loans for many Aussie businesses facing a cash flow blip on their radar.

If COVID (or any other circumstance) has got you in a temporary cash pot-hole, then keep reading to discover how we can help fill in the gap to keep your cash cruising.

How do Caveat Loans work?

Caveat Loans in Australia still remain a mystery to many, so if you’re unsure what a Caveat Loan facility is, or even how it works, don’t worry, you’re not alone.

A Caveat Loan is created when a caveat is placed on an existing property to be used as security for a short term loan.

You may think that securing a loan with a property automatically creates a second mortgage, but the fundamental difference between a Caveat Loan and a mortgage is the lending criteria and loan terms.

 

What is the loan term of a Caveat Loan?

Typically (as you’re probably aware), a mortgage can have a term of up to 30 years, whereas a Caveat Loan is usually only up to 36 months.

How are Caveat Loans secured?

Another key difference between second mortgages and a Caveat Loan is that with Caveat Loans, the caveat is a form of encumberment on the title of the security property and sits behindany existing mortgage, meaning that consent from your bank isn’t required.

More importantly, a second mortgage will generally have much stricter lending criteria because whoever the lender of the first mortgage is, holds priority if you happen to default on your repayments.

While the caveat is active over the property, it can’t be used as security against another debt or sold.

The lender’s interest ends as soon as you have repaid the loan and is done so quickly and easily with minimal paperwork.

How much can I borrow under a Caveat Loan?

The loan amount depends on how much equity you hold in the existing real estate property.

Diverse Funding Solutions can lend you up to 80%+ of your existing property value!

Of course, given that Caveat Loans are only short term in nature, they’re great for lending just enough to get you through any tight cash flow spaces.

That being said, the ability to borrow up to 80%+ of your property’s value means you can rest assured you will have sufficient funding and are not restricted to the traditional 50%-75% that other lenders are prepared to lend for a business purpose.

Who can get a Caveat Loan?

Caveat Loans are obviously only available to those who hold an existing property.

Due to being one of the many business finance solutions offered by Diverse Funding Solutions, we also require you to be an ABN holder.

NO ABN OR COMPANY?? No worries!

Diverse Funding Solutions can now get you a caveat loan without one!

 

How can a short term Caveat Loan help my cash flow?

If you’re experiencing a lull in incoming funds, but know things will pick up again on the other side, a short term caveat loan can be an excellent way to keep your cash buoyant without suffering more serious financial detriments.

Chances are, if you need a short term loan, then you need it quick and hassle-free; that’s the beauty of a Caveat Loan through Diverse Funding Solutions.

Some of our clients have used one of our fast Caveat Loans to help with:

Preparing a home for sale

Looking to take advantage of the housing price boom?

A Caveat Loan can help provide short-term funds to prepare your property for sale, including urgent renovations.

Property buyers truly have the upper hand in the current climate, so why not stand out from the crowd with immaculate presentation of your property using a caveat loan?

Funding between a property sale and purchase

In today’s market, it’s common that the settlement dates between buying your next property and selling your existing one won’t perfectly align.

Short term caveat loans can help bridge the financial gap between purchase and sale, meaning you can strike while the investment property iron is hot.

Paying tax bills

With COVID’s disruption to business, it’s little wonder some business owners will struggle to pay their tax bill immediately.

A caveat loan can assist in providing the funds needed to cover your ATO expense until funds arrive in the months afterwards.

With the ATO’s ability to report overdue tax debts to credit reporting bureaus, it’s essential to keep on top of your payments.

Taking advantage of opportunities

Taking advantage of opportunities when they present themselves can be one of the positives to come out of COVID’s impact, particularly if you run a small business.

Unfortunately, invoice lag can affect your ability to fund the opportunities as they arise.

Other small business loans don’t always come through with funding quick enough, whereas business Caveat Loans can provide funds in as quickly as 24 hours.

This means you can take advantage of large stock orders offered with bulk discounts, purchase new equipment that’s gone on sale or even hire that golden employee your business has been crying out for!

 

The benefits of using a Caveat Loan

If you’re considering your business loan options to help get you through a money crunch, then accessing a caveat loan through Diverse Funding Solutions could provide many benefits over other loan types.

Fast and Easy approvals

Compared to bank loans, private lending solutions hold the trump card when it comes to ease, speed and efficiency of having your loan processed and approved.

The benefits of accessing a private lender through Diverse Funding Solutions means that we don’t need to overcomplicate the loan process and can process your loan without the need for a full-scale property valuation, revenue forecasts or proof of your tax returns.

Our minimal documentation process means that we can offer a fast-tracked approval which many other lenders simply can’t compete with Caveat Loans settle faster than almost all other loans for business purposes.

In fact, we can even offer an Australia-wide urgent settlement for those in need, meaning we can settle your funds on the same day you apply! Talk about fast finance!

You can apply even if you have bad credit or a poor credit history

During our application process, we do not conduct a credit check, which means you can still access the benefits of a caveat loan even if you have bad credit.

Other loan products are simply not available if your credit has suffered throughout the recent tough times, making caveat loans a true saving grace.

Private funding provides the benefit of being able to look at repayment schedules and devising an appropriate exit strategy rather than relying on your credit history.

You can access a caveat loan even if you still owe money on your mortgage

You may have picked up above where we mentioned that a caveat sits behind any existing mortgage; so yes, you can access a Caveat Loan if you still hold a first mortgage on the property!

How do I apply for a caveat loan?

A caveat loan application only takes 30 seconds, meaning we can get you an answer quickly and settle just as fast.

At Diverse Funding Solutions, we are your gateway to one of many Australian private lenders willing to help lift you out of your financial lull.

Contact us now to see how we can help correct your cash flow woes!

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