Some Surprising Facts About Caveat Loans

By: Aaron Robbins0 comments

When looking for business finance solutions, you might be surprised at just how fast and flexible short term caveat loans can be.

If you’re a business owner who also owns real property and you’re looking for a short term loan, then consider how caveat lending could work for you.

Want to be pleasantly surprised? Keep reading as we uncover some more surprising facts about caveat loans.

What is a caveat loan?

A caveat loan is a type of business loan that uses the equity in real estate property as security.

They’re often called short term caveat loans, because they’re typically offered over loan terms between 1 month to 36 months (and sometimes longer, depending on the borrower’s needs).

Property developers often use a a caveat loan to fund their development projects, but you don’t need to be a property developer to benefit; business owners often use this type of lending as a an alternative to approaching their bank or business lender for finance.

Caveat loans are also referred to as fast caveat loans, because of how quickly a caveat loan application is processed.

Fast approvals make caveat loans a fantastic solution for businesses who needs funds quickly, which leads us to surprising fact number 1:

  1. Caveat loans are funded quicker than almost all other business loans

Many clients tell us here at Diverse Funding Solutions just how surprised they are at how quickly their caveat loan is funded.

The reason caveat loans settle so quickly is because of how efficient the application process is.

Most times, when you apply for a caveat loan, you can have an answer the next day (if not the same day) and your loan is funded shortly after.

Other loans simply can’t compete when it comes to funding speed, with traditional bank loans or business loans from other lenders often dragging out for weeks or sometimes even months.

Of course, the time it takes to fund a caveat loan application will vary from one borrower to another, but Caveat Loans are considered fast finance for a reason!

  1. Caveat loan applications require minimal documentation

If you’ve ever applied for business finance in the past, then you’re probably no stranger to the mountain of paperwork required by most lenders.

A fundamental difference between traditional lenders and Diverse Funding Solutions is that we usually only require three main documents to process an application for a caveat loan:

  1. a) Your council rates notice
  2. b) Your mortgage statement
  3. c) Your identification

You’ll notice that we don’t ask for years worth of tax returns, revenue forecasts, cash flow statements and there’s no formal valuations required in most cases.

We know that running a business can be stressful enough, which is why we try to make caveat lending as hassle free as possible for our clients.

  1. Your credit file isn’t accessed when you apply for a caveat loan

We know that business owners pour themselves into their businesses, including their personal finances, which can sometimes result in bad credit.

Perhaps surprisingly, we do not need to conduct a credit check in order to assess an application for caveat lending.

Instead, as private lenders, we set our own lending criteria.

This means that instead of relying on your past or your personal circumstances, we look at your current situation and that in your near future to determine a suitable exit strategy and repayment schedules, on terms relevant to your unique business needs.

  1. You don’t need to own your property outright, to use it for security

If you’re thinking that the catch is you need to own your security property outright in order to use it to secure a caveat loan, then think again.

When a registered caveat is placed on a property title, it sits behind any existing mortgage (which includes second mortgages).

This means that provided you have sufficient equity to satisfy your desired loan amount and we can devise a suitable exit strategy for the loan, then a home loan or second mortgage won’t forbid a caveat loan from going ahead.

  1. Interest rates are affordable on short term caveat loans

Some other short term funding solutions come with the downside of astronmical interest rates.

Thankfully, at Diverse Funding Solutions, we buck this trend by offering some of the most competitive caveat loan interest rates in the private lending market.

Our short term caveat loan rates start at only 0.77% per month.

Interest rates are an important consideration, particularly if you’re look at using a caveat loan to perform a debt consolidation for your business.

Use our express quote request to check out what your caveat loan rates might look like! It’s fast, free, and won’t affect your credit score – now that’s surprising.

Frequently asked questions about Caveat Loans

Intrigued about what more there is to know about Caveat Loans? We answer some frequently asked questions, below.

What can I use a caveat loan for?

There is really no restriction on what you can use a caveat loan for, provided it’s for a business purpose.

Many business owners use caveat loans for business purposes such as paying off large tax bills, debt consolidation, improving cash flow, re-branding or renovating, preparing their business for sale and much more.

How are caveat loans secured?

Caveat loans are secured when the lender’s interest on a property is registered by placing a legal caveat on the title deed of the property. The caveat does not give the lender permission to sell the property in the event of loan default, however it does forbid any other transactions occuring on the property while it’s active (these include selling the property or transferring ownership of it).

What kind of property can I use for security?

Only Australian real property is able to be used as security for a caveat loan, which could be residential property or an investment property. Overseas properties cannot be used as security for caveat loans.

How much can I borrow?

You are able to access up to 75% of the available equity in your property value with a caveat loan from Diverse Funding Solutions. A quick way to estimate your available equity is to deduct any money owed, such as any home loans including a first mortgage, investment loan, or second mortgage from the value of your property.

What will my interest rate be?

What are the fees on a caveat loan?

As we mentioned earlier, Diverse Funding Solutions offer caveat loans from 0.77% per month. Your final interest rate will not be determined until the lender receives and processes your application.

There are no hidden fees when it comes to Diverse Funding Solutions, our team can provide you with a full run down once we’ve found the best private lender for your lending transaction.

Should I get legal or financial advice before using a caveat loan?

The need for professional advice will vary depending on each person’s unique business set up. Most lenders do not hold the required licenses to offer legal nor financial advice, so it’s imperative borrowers seek this prior to applying, if they think they need it.

What is private lending?

Private lending is offered by individuals or organisations outside financial institutions such as a bank or credit union.

Diverse Funding Solutions is proud to be a financial broking firm that offers fantastic caveat loans to Australia businesses.

This is what helps make us one of Australia’s leading private lenders.

If you need money fast, but the idea of accessing traditional business finance takes the ‘fun’ out of ‘funds’ – then let us continue to surprise you with our outstanding customer service.

Simply fill in your details to receive a call back in a timely manner, reach out to us directly, or even apply now!

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