What are Caveat loans?
Caveat Loans refer to the type of security offered for the finance you obtain. Finance if offered, and secured by a caveat lodged against your property. These loans are traditionally used for short term purposes were there is a clear exit strategy for the loan.
What is a caveat?
a caveat is a notification registered on a title that indicates someone has a financial interest in the property.
What purpose can Caveat Loans be used for?
Caveat loans are usually only for pure business purposes. These business purposes might include:
- Pay tax debt
- Fund a shortfall in a business purchase
- Purchase stock
- Any worthwhile business purpose with a clear exit strategy.
What is the Term of a Caveat Loans?
Caveat Loan terms are usually quite short – usually from 1 – 6 months at the most. The term of the caveat loan is set according to the exit strategy.See below some examples of exit strategies used to set a caveat loan term.
What is meant by an exit strategy?
Exit strategy refers to the payout of the caveat loan. How will the loan be repaid? Is the loan to be tepid by a receipt of lump sum funds, sale of an asset, a loan refinance?
- If you are experiencing lumpy cash flow through your business then the term of the caveat loan would be set according to when you expect cash fllow availavle to close off thew caveat loan.
- If you are expecting a slae of an asset then the term would be set post settlement date of your sale.
What is the Cost of Caveat loans?
Caveat loans are suited to specific purposes. Because the security for the funds is not as strong as a second or first mortgage for the lender, caveat loans can be expensive. Set up fees, legals and interest rates mean they are usually prohibitive for general purposes. If a full refinance can be obtained with a first mortgage security this would be advisable. Most clients who set up caveat loans are in need of funds urgently to avoid a bankruptcy, major credit issues, loss of business etc. where the cost of set up and eventual exit is far more beneficial that the other alternatives.
Loan Saver conducts a detailed analysis to determine if caveat loans are most suitable. In most cases where a caveat loan is sought, we are able to secure a suitable 1st mortgage with effective negotiation with the creditors.
Contact Loan Saver Network to discuss your circumstances and discuss a suitable finance plan. As professional caveat loan brokers in Melbourne, we can help you decide your best course of action. Our phone number is 1300 796 850.