Caveat loans are short term loans secured by the equity in your property. They are usually far more expensive than a regular home loan. The reason for this is that while the lender’s interest in the money’s lent is protected by a caveat placed on your property, they can not force you to repay the loan until your property is sold.
Caveat loans have a set up fee as well as interest rates that range from 2% per month to 6% per month depending on lender.
Generally it is not possible to borrow beyond 75% of the value of your security property. The lender will also want to know where the money to settle the loan are coming from.
These loans are expensive however sometimes can be worthwhile where :
- you need an amount of money in a matter of days to ensure you do not miss out on a business opportunity;
- the anticipated income from the business opportunity will make the loan set up costs worthwhile.
Note these loans are only available for business purposes.