What are Caveat Loans?
A Caveat loan is a loan that uses a government registered caveat to secure the lenders financial interests against the title of the security property. A caveat loan uses only a caveat to secure the funds borrowed. It is rare to find a pure caveat loan as a caveat identifies another party has an equitable interest in the property, however does not give the lender the right to sell the property to recover funds. Caveat loans usually play a part in securing funds in a short period of time (24-72 hours) at which time a second mortgage is worked on behind the scenes.
What Is A Caveat?
A caveat is a document that can be lodged against the title of your property. A caveat indicates an equitable financial interest in a property however does not give the “caveator” the right to sell the property to recover monies owed.
What Purposes Can Caveat Loans Be Use For?
Caveat loans are usually only for pure business purposes. These business type of business situation that might prompt one to consider applying for caveat finance could include:
- Paying off tax debts
- Funding a shortfall in a business purchase or a business purchase in full.
- Purchasing stock
- Suitable for Start-up business purposes
- Purchase Real Estate for commercial purposes – real estate such as warehouses, offices, retail premises, and in some circumstances residential property.
- Business Restructuring Purposes - where existing Business overdrafts, business loans or debts need to be restructured into the new entity.
- Business Liquidation Expenses
- Any worthwhile business purpose with a clear exit strategy and timeline
What Loan Terms Are Provided With Caveat Finance?
Caveat Loan terms are usually between 1 month and 12 months however longer terms are available which relate to your intended purpose and your exit strategy.
What Is Meant By An 'Exit Strategy'?
Exit strategy refers to paying back the borrowed funds to the lender. Repayment terms are different than with traditional finance where a mortgage loan is paid back over a 25 or 30 year term. Caveat loans are usually paid off by the receipt of a lump sum of funds. This could be obtained from the sale of an asset (the security property or other property) or a loan refinance, sale of stock, funds from a business venture, or sale of the business itself.
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