Your visit to this page can have only one reason. You want to know everything about a caveat loan. So, here we have penned down an article with loads of information about the application process for this type of loan. We assure you that our detailed explanation about the application procedure will increase the chances of the approval of your funding needs. Read on to find out more.
A Few things you need to remember before applying for a caveat funding
A caveat or short-term second mortgage loan helps a business owner by providing funding using the available equity of the borrower’s property. Many private lenders or credit providers lend a lump sum amount to a property holder by securing the loan with a caveat on the borrower’s property. This type of funding is not reliant on credit score and full financial information of the business is not required.
Although caveat funding usually works as a second mortgage loan, there are few differences. First of all, in a second mortgage loan, you need to follow all the complexities like the 1st mortgage loan. Most second mortgage funders have strict criteria such as valuations, full financials to be provided and the first mortagee needs to provide consent to the second mortgagee.
However, in caveat funding, consent is not required and funding can occur in as little as 24 hours. Once the loan has been repaid in full the lenders removes the caveat from the property. Caveat loans are always high in demand for hassle-free applications and instant approval facilities.
Producing the correct documents increases the chance of caveat fund approval
Since caveat funding is a hassle-free funding procedure, you do not need to submit bundles of papers to get the approval of your loan. Apart from the quick approval, this is also one of the primary benefits of the loan. Below we have listed all the documents you need to arrange for applying for the caveat finance. Remember, to supply all required information when applying to make sure the process is quick and simple.
Proof of Identity
Most lenders will require photo identification to confirm who they are dealing with and to make sure the correct property owners are applying for the loan.
Proof of ownership of the security being offered
Lenders will require a rates notice and a copy of the most recent mortgage statement if there is a first mortgage on title. In the application process you will be asked to estimate the value of your property and advise how much is owing, this way the lender can calculate the equity available and work out how much you can borrow.
You will need to provide details of your ABN or ACN number of your business, most lenders like to know how long you have been in business for and what your plan is for the use of the funding required. Caveat funding is available for any worthwhile business purpose such as boosting cashflow, purchasing equipment or business expansion.
Approval! A sigh of relief
Caveat funding is one of the easiest loans to have approved as the criteria is not as strict as bank funding and private lenders base their decision on equity available and also what your exit strategy is to repay the loan within the nominated time frame. As you do not have to provide much documentation the approval process can be quick and simple.
Long story short
Here we have briefly described the quick process of the caveat funding approval, which can be finalised in as little as 24 hours.
- Present all the necessary documents to the lenders.
- The lenders assess the information and equity available.
- If the applicant’s documents satisfy them, the lenders approve the caveat finance.
- Finally once approved the caveat is lodged and funds provided.
Several circumstances increase the chances of approval of your caveat funding application.
Before approving your caveat loan, lenders go through your documents to check your eligibility. Once approved and funded once a loan has been repaid lenders are likely to approve again and again as you have a good repayment history with them. Subsequent application are even faster as you have already demonstrated you can repay the loan.
If you have a small business but your do not have a good credit history caveat funding is a great option as credit files are irrelevant to the lenders as they are fully secured by the caveat over your property they look past the credit issues you may have and help your business move forward.
Equity in property plays a large role in the caveat finance approval. Most lenders have a maximum guideline of 75% total lending against a property, so the more equity you have the larger the loan you can obtain and increase your chances of approval. So, there are two methods to increase the equity in your property over time. These are:
- The equity in your property increases the quicker you repay your current first mortgage over the property, if you can make extra repayments that what is required your equity will increase quicker.
- The value of property usually tends to increase with time. So, the current market value of your property can increase depending on market conditions, the quicker the prices of houses increase the equity in your property, in Australia, the cost of the property has been rising for years.
Following the steps above will help in securing caveat funding for your business quickly and easily, this will help your business to not only survive but to thrive.