If you have a first mortgage on your house and you obtained a caveat loan, it works as a second security. The caveat would be in your title, and will only be removed when you have fully paid the loan. Simply put, a caveat loan is like a second mortgage, where the loan is secured against a house or any real estate property owned by the borrower. Only that it is a short-term loan. But is a caveat loan better than refinance?
Caveat loan is usually approved within 24 hours. No valuation is necessary and you can get it regardless of bad credit history. The interest is already prepaid. But, it is not applicable to all borrowers because of the quick settlement feature, which often ranges from 3 to 6 months.
How can I repay a caveat loan?
You can repay it through refinance, sale or any other exit strategy that the caveat lender approves of.
The lenders have their own criteria in determining how you are going to give them their money back at the end of the loan term. If you are selling your asset within 3 months, the caveat loan will be serviced out by the proceeds of the sale.
Does caveat loan settle quicker than a second mortgage?
It depends on the lending agency. The Australian Lending Centre, for example, has a remarkably speedy settlement process for refinancing that settles much quicker than other lenders. They have refinance specialists that help borrowers choose the best refinancing product to help them, get the money they need in the soonest possible time.
Is caveat loan a practical loan alternative?
If you are sure that the buyer of your house would pay before the term of the loan ends, why not? But, if you don’t have a ready-buyer or you simply rely on refinance as your exit strategy, it may be difficult to count on it because you don’t know exactly when that money is really coming in.
I took a caveat loan and its due in a month. But my loan is not yet discharged and the money I am expecting is not yet in my account. What should I do now?
You can give yourself enough flexibility by applying for refinance or short-term loans to pay off your caveat loan before the term ends.
Australian Lending Centre offers mortgage refinancing products with lower repayments and interest rates that would not only allow you to pay off your caveat loan but your multiple debts as well. Its debt consolidation product rolls over high-interest credit card debts, personal loans and other loans.
Caveat loans often come with high-interest rates. If you want to take care of this type of debt easily you can refinance your existing home loan, consolidate your debts and take advantage of ALC’s low variable rate. You can also switch to fixed-rate or lock-in interest rate if you want.
Caveat loan or refinance?
If you don’t want to face the risk of not being able to repay on time, you can instead access the equity in your home through refinancing.
Contact the Australian lending Centre for more information on caveat loans and refinance.