Caveat Loan Specialists

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Caveat Loans FAQ

What is a caveat loan?
A caveat loan is a loan in which finance is obtained and secured by a piece of real estate. For a loan to be approved, a caveat is lodged on the title of ownership of the property. The caveat acts as a warning to inform other parties that someone has an interest in the property.
What is the purpose of a caveat?
A caveat is placed on the property to prevent the owner from selling, transferring, or dealing with the property without the consent of the Caveator who in the case of a business loan would be Simply Funds. When active, a caveat also prevents the property in question from being used as collateral for any other loan.
How much can I borrow with a caveat loan?
This will be determined by the value of your property, the type of real estate, and the available equity currently available. Those with equity in a residential or commercial property can get up to 70% LVR (loan to value ratio). Rural property can still be used but the LVR will likely be lower.
How long does it take for a caveat loan to be processed?
The entire process of a caveat loan including funding can be complete in 3-4 days.
What is the difference between a caveat and a mortgage?
The main difference lies in the rights of the party who is taking an interest in the land (property). A caveat prevents the owner of the property from undertaking certain actions with respect to the property. This includes selling or transferring. In contrast, a mortgage gives the lender the right to sell the property if the borrower fails to make repayments on time and subsequently defaults.
Can a property be sold if it has a caveat?
When there is a caveat on a property it cannot be sold, nor can it be used to obtain further funding. It does not however give the caveator the right to take possession of or sell the property. In business loan terms this means that neither you or Simply Funds (caveator) will be able to sell your property while there is a caveat on it.
Should I buy a property with a caveat?
A caveat prevents the owner of the property from selling it from the specified start date of the caveat until is removed. A caveat can be removed by the consent of the caveator or by the owner lodging a ‘lapsing notice’. The most critical information for borrowers to be aware of is that a caveat is removed once a loan has been repaid.
Can a caveat be challenged or removed?

There are three ways in which a caveat can be challenged or removed:

  1. By requesting that the caveator do so. This is accompanied by a form and lodged to the relevant registry.
  2. Through the issue of a lapsing notice. 
  3. Applying to the Supreme Court for the removal of the caveat.

Note: The person lodging a caveat is liable for legal and financial penalties if it is found that they did not have a valid interest in the property known as a ‘caveatable interest’.

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