Caveat loan requirements: the eligibility checklist

Before you spend time on an application, it helps to know whether a caveat loan can work for you at all. This page is the checklist: six core requirements, what passes, what needs work and what usually rules a deal out. It doesn’t re-explain how caveats work; for that, read our caveat loans pillar.

At a glance: do you meet the caveat loan requirements?

Requirement	Passes	Needs work	Usually doesn’t fit
1. Property	Australian residential, commercial or industrial property	Vacant land or rural property (case by case)	No Australian property to offer
2. Equity	Clear equity after every existing mortgage and caveat	Thin equity, or several interests already on title	Debts already close to or above what the property would sell for
3. Purpose	A business purpose: tax, stock, a contract, a business or investment settlement	Mixed purposes that need separating	Personal or household spending
4. Exit	Dated and evidenced: sale, refinance, known receipt	Real but unevidenced, or dated beyond a short term	“Things will pick up”
5. Signatures	Every registered owner available to sign	Owners overseas, or a company or trust needing documents	A co-owner who won’t sign; a current bankrupt
6. ID and documents	Photo ID for every signer; loan statements	Missing entity records or statements	Identity can’t be verified
Existing lender’s terms	No restriction, or consent given	Consent requested but pending	Contract prohibits further encumbrances and lender refuses
Amount	$20k to $5m		Below $20k or above $5m

If most of your answers sit in the first column, you’re in good shape. Anything in the middle column is usually fixable with time or paperwork. The last column is where a different solution, such as a sale or a registered first mortgage, may serve you better.

Key terms used in this checklist

• Caveat: a notice recorded on the title that protects a claimed interest and blocks most other dealings until it’s withdrawn, removed or lapses.
• Caveator: the party that lodges the caveat; here, the lender.
• Equitable mortgagee: a lender whose interest comes from a loan agreement that charges the property, rather than from a registered mortgage.
• Registered owner: each person or entity named on the title. All of them sign.
• Exit: the event that repays the loan.

What property qualifies for a caveat loan?

Residential, commercial or industrial property in Australia, with vacant land and rural property considered case by case. The property can be held personally, by a company or by a trust. Your home can be used for a business purpose; see a second mortgage on your home for business for the home-specific points.

The property must be yours to offer. AFSA explains that when a person becomes bankrupt, the trustee becomes the owner of their share of any property, so a current bankrupt can’t give it as security.

How much equity do you need?

There’s no single published figure. The lender looks at what the property would realistically sell for, subtracts every mortgage and caveat already on the title, and considers the term and the exit. If interest is capitalised, the loan balance grows during the term, so the equity has to cover that as well.

Illustrative example: a Townsville earthmoving contractor owns a shed assessed at $1m with $550k owing to the bank, and needs $120k for six months. Illustrative: total debt including the caveat loan is $670k, or 67% LVR, before capitalised interest is added. The equity comfortably covers the loan and the interest, and the exit is a progress payment on a signed civil contract due in month five.

Our page on how much equity you can use explains the arithmetic in full, and the secured borrowing power calculator gives a quick estimate.

Does the purpose have to be business?

Yes. Caveat loans here are for business purposes only, including property investment and development businesses. Common purposes:

• paying an ATO debt or a director penalty notice;
• settling a business or investment property purchase on time;
• buying stock or funding a contract before the client pays;
• paying out another lender whose loan is maturing.

What exit does a caveat loan need?

Because a caveat loan is short, the exit has to be close and concrete. Good evidence includes an unconditional sale contract, a refinance application already in progress, a signed contract with payment dates, or a letter from your accountant about a known receipt.

In Queensland the exit matters even more. Titles Queensland’s practice manual says an equitable mortgagee can only lodge a lapsing caveat, which lapses three months after lodgement unless the caveator starts proceedings, and that the registered owner’s consent doesn’t change that for an equitable mortgagee. A Queensland caveat loan should be built around an exit inside that window, or planned from day one to convert to a registered second mortgage. See converting a caveat to a second mortgage.

Who has to sign a caveat loan?

• Every registered owner, on the loan agreement that gives the lender its interest in the property.
• Directors, where a company owns the property or borrows, usually with personal guarantees.
• The trustee, where a trust owns the property, provided the trust deed allows it to borrow and give security.
• Guarantors, where someone else’s property or support is involved. They should take independent legal advice.

That loan agreement is what gives the lender something to protect. NSW’s Registrar General’s guidelines put it simply: only those claiming an eligible estate or interest in the land can record a caveat. The caveatable interest glossary entry explains why a properly drafted charge clause matters.

What ID and documents are required?

• Photo ID for every borrower, owner and guarantor.
• Statements for each loan secured on the property, including any existing caveat lender’s payout figure.
• Company extract or trust deed, if relevant.
• A short note on the purpose.
• The exit evidence described above.

Do caveat loan requirements differ by state?

The core requirements are national. The rules around lodging and lapsing differ, and they affect how long a caveat loan can safely run.

State	What to know
Queensland	A lender’s caveat as equitable mortgagee lapses after three months unless proceedings start; Form 11 caveats must be lodged electronically unless an exemption applies
New South Wales	Only someone claiming an eligible interest can lodge; lodgement is by a subscriber such as a lawyer or conveyancer; a lapsing notice gives the caveator 21 days to get an order from the Supreme Court
Western Australia	Anyone capable of taking a registered interest, mortgage or charge can lodge; mortgage terms may prevent a caveat without the mortgagee’s consent
NSW and Queensland	A caveat lodged without reasonable cause or a proper basis can expose the caveator to compensation claims, which is why lenders lodge only with a signed loan agreement

Our guide to caveat lapsing notices by state covers every state and territory.

Who are caveat loans suited to, and who should choose something else?

A caveat loan suits:

• a deadline measured in days, such as an ATO cut-off, a settlement or a supplier payment;
• smaller amounts, where $20k to $250k is possible the same day;
• an exit that is already in motion and due within months;
• owners whose existing lender’s contract allows a caveat, or who have its consent.

Something else may suit better:

• a need measured in a year or more, where a registered second mortgage or a private first mortgage gives a firmer footing;
• a large amount relative to the equity;
• a Queensland property where the exit is likely to run past the three-month lapsing window.

How do caveat loan requirements compare with a registered second mortgage?

	Caveat loan	Registered second mortgage
What’s recorded on the title	A caveat protecting the lender’s interest	A registered mortgage ranking behind the first
Existing lender’s position	Contract may still restrict caveats	Consent often required under the contract
Lapsing risk	Can lapse under state rules (three months for a Queensland lender’s caveat)	Doesn’t lapse; stays until discharged
Usual term	Shorter	Longer than a caveat, still short-term
Speed	Usually the quickest to put in place	Quick, once consent is in hand
Can it change later?	Can convert to a registered second mortgage	Discharged on repayment

The guide to first vs second mortgage vs caveat lays out all three structures side by side.

What usually makes a caveat loan fail?

Most declined caveat loans fail for one of a handful of reasons, and nearly all of them are visible on day one:

• The exit is a hope, not an event. No contract, no application, no date.
• The equity is already spoken for by earlier mortgages, caveats or arrears.
• A co-owner won’t sign, or can’t be reached in time.
• The purpose is really personal, such as a home renovation or a car.
• The existing lender’s contract prohibits further encumbrances and it won’t consent.
• Surprises surface late, such as an undisclosed second caveat or a court judgment.

Every one of these is easier to solve when it’s raised on the first call. Our guide to exit strategy red flags explains how lenders read the most common warning signs.

How do you go from checklist to funds?

1. Run the table above and note anything in the middle column.
2. Enquire in about 60 seconds. No credit check.
3. Specialist call to confirm the property, the equity, the purpose and the exit.
4. Assessment of the property by the lender. No formal valuation required.
5. Letter of Offer, reviewed with your solicitor.
6. Sign, lodge and fund. Property-secured amounts of $20k to $250k are possible the same day, and up to $5m within 24 to 48 hours once documents are in.

If the deadline is close, read what speeds things up in fast second mortgages, then check your eligibility with a specialist.

What does a caveat loan cost?

Meeting the requirements tells you a caveat loan is possible; the price depends on how strongly you meet them. More equity, a shorter and firmer exit and a cleaner title all help, because each loan is priced on its security, LVR, term and exit, and the aim is the sharpest price that deal allows. A caveat loan does cost more than a first mortgage, since the lender sits behind any existing mortgage and relies on a caveat rather than a registered security. Expect a small assessment fee, which differs from loan to loan and is listed on the Letter of Offer. Interest can be prepaid or capitalised, so the term may run with no monthly repayments.

Ticked most of the boxes? See if you qualify

If your property, equity, purpose and exit line up, the rest is paperwork. Tell us about the property, what’s owing and what the funds are for. Enquiries go straight to fundU, the direct lender behind this site, and a specialist there reviews yours and calls; nothing is sent to a list of other lenders. There’s no credit check when you enquire.

Accurate figures on the property and every debt against it give you a reliable answer the first time. Not sure a caveat is the right structure? The 60-second structure quiz compares it with a first or second mortgage.

Start your caveat loan enquiry and find out where you stand today.