What a caveat actually does
A caveat is a notice recorded against a title that warns the world the caveator claims an interest in the land. It does not transfer ownership and it is not a mortgage. Its practical effect is to block a sale, transfer or new mortgage being registered without the caveator's consent — which gives the lender leverage to be paid out at settlement.
Because lodging a caveat is quick and does not require the first mortgagee's discharge or consent to registration, funding can occur in as little as 24 to 72 hours.
Typical terms
Caveat facilities are usually modest — often tens of thousands to a few million — for terms of one to six months, with interest capitalised and repaid in a single lump sum from a sale, a refinance or contracted proceeds. Because the position is weaker than a registered mortgage, pricing is at the higher end of private lending, and establishment and legal fees apply.
The risks to understand
The security is fragile. A caveat can be challenged, and a caveat lodged without a proper caveatable interest can be removed and expose the caveator to compensation claims. If the exit slips, the borrower faces default interest on a facility already priced for speed, and enforcement is harder than under a registered mortgage.
Caveat loans are a tool for genuine short-term timing gaps with a certain repayment source — not a way to fund an ongoing cash shortfall.
Key points
- A caveat blocks dealings with the title; it is not a mortgage.
- Settlement in days, terms of weeks to a few months.
- Weaker security means higher pricing than first or second mortgages.
- Only appropriate where the repayment event is genuinely certain.
Frequently asked questions
Do I need the first mortgagee's permission for a caveat loan?
Registration of a caveat does not require the first mortgagee's consent, though the underlying mortgage terms may still restrict granting further interests. This is a matter for your own legal advice.
How fast can a caveat loan settle?
Frequently within 24 to 72 hours once valuation and legal requirements are satisfied.
Are caveat loans available for personal use?
No. We only arrange loans for business and investment purposes; caveat lending is not consumer credit.