Caveat loans for builders are one of the fastest ways to unlock equity in a property that already has a loan on it. But there’s a catch most websites won’t tell you up front: we only write caveat loans in Victoria.
Let’s clear that up first, then get into how they work for Victorian builders.
Are caveat loans available in my state?
Only if your security property is in Victoria.
In NSW, Queensland, WA, SA, Tasmania, the ACT and the NT, we use a second mortgage instead. A fast second mortgage sits behind your existing loan, is registered on the title, and does the same job a caveat loan does for a Victorian builder. It’s also by far the most common secured product we arrange, even in Victoria.
So if you’re a builder in Brisbane, Perth, Adelaide or Sydney who searched for a caveat loan, head to the fast second mortgage page. Everything you were hoping to get from a caveat loan, you can get there.
What is a caveat loan?
A caveat is a notice lodged on a property’s title that tells the world someone has an interest in it. With a caveat loan, the lender lodges a caveat over property you own to protect its position, rather than registering a full mortgage.
For Victorian builders, the appeal is simple: it’s a quick way to access equity in a property that already has a first mortgage, without refinancing the existing loan. Your lawyer can explain the legal differences in detail. Our guide to second mortgages vs caveat loans covers the practical side.
Caveat loan or second mortgage: which should a Victorian builder choose?
If your property is in Victoria, you can often choose. A few things to weigh up with your lending specialist:
- Your existing lender. Some first mortgage lenders are fussier about second mortgages than caveats, and vice versa.
- The loan size and term. Caveat loans tend to suit smaller, shorter needs. Larger or longer loans often suit a second mortgage.
- Speed of documents. Both can move quickly. What slows either down is usually paperwork, not the product.
Most Victorian builders end up with a second mortgage anyway. We’ll recommend whichever suits the deal.
What Victorian builders use caveat loans for
- Getting a stalled build to lock-up or practical completion
- Paying a supplier account before it goes on stop
- Covering wages while a progress claim is in approval
- Paying a land deposit on a new site
- Clearing an ATO or BAS debt before it escalates
- Buying materials in bulk before a price rise
The loan is secured against property you already own, like your home, an investment property or land with equity. It’s not based on the value of a build once it’s finished.
Example: a Geelong builder between claims
Hypothetical example only.
A small builder in Geelong has three single storey homes at frame stage. A materials order for roofing and windows is due, but two progress claims are still in approval with the client’s lender. He owns an investment property in Werribee with a bank loan on it and plenty of equity.
Because the property is in Victoria, he can use a caveat loan. He takes a 3 month caveat loan against the investment property, pays for the materials and keeps all three jobs on schedule. When the claims are paid, he repays the loan.
Same builder, different state: if his investment property had been in Albury, over the border in NSW, the same deal would have been done as a second mortgage.
Key facts: caveat loans for builders
- Where: Victoria only. Second mortgages are used in every other state and territory
- Loan size: $20,000 to $5 million
- Security: Existing property equity (home, investment property, commercial property or land)
- Speed: As little as 24 hours in some cases; typically a few days once valuation and documents are in
- Term: Typically 1 to 12 months
- Financials: Not needed; bad credit considered
How fast can a Victorian builder get a caveat loan?
Property secured loans, including caveat loans, can be funded in as little as 24 hours in some cases. More typically it takes a few days once the valuation and documents are in. The product itself isn’t what slows things down. The usual delays are a valuer who can’t get access, missing ID for a joint owner, or signed documents sitting in someone’s glovebox. If you have the property details, your existing loan statement and ID ready when our lending specialist calls back, you give yourself the best chance of a quick settlement. No financials are needed, and bad credit is considered.
What you’ll need
- The address of the Victorian property and who owns it
- Details of the existing mortgage
- Photo ID for each borrower and guarantor
- What the money is for and how you’ll repay it
Mistakes to avoid
- Assuming a caveat loan is available everywhere. Outside Victoria, look at a second mortgage instead.
- Chasing the product instead of the outcome. You need the money. Let the lending specialist pick the best structure.
- No exit plan. Caveat loans are short term. Know how you’ll repay before you sign.
Find out what you can borrow
Whether your property is in Victoria or anywhere else in Australia, start your application in about 60 seconds. We’ll tell you quickly if we can help, and whether a caveat loan or a second mortgage fits best. If you’re weighing up bridging options too, see business bridging loans.
