The requirement of money can arise at any time for businessmen and entrepreneurs. Typically, they may need money to expand their business, repay a debt they have already taken or for bridge financing in the short term. Whatever the need, there are lenders available to offer the caveat loan and make life easier for such people.
The caveat loan or the urgent caveat loan is a loan with the caveat that the borrower will not be allowed to sell the real estate asset he or she has provided as security against the loan taken. Usually the real estate valuation with LVR 70-75% is considered good enough for lenders and they give the loan within a week and at times even within 24 hours.
It is this convenience and speed of getting the caveat loan that sets it apart from other loans.
Unlike normal loan processes, the disbursement is quick and the exit strategy too is
uncomplicated. You are free to repay within a month or at the end of the exit period or even
rollover if you cannot repay at that time. Usually borrowers seek loans that they can repay in a couple of months or so. The caveat loan is essentially short term and at times may go for a year, through rollovers and even longer.
There are cases though of borrowers who wish to make use of their real estate asset that is
currently not giving them any income to take caveat loans. They take the loan and use it for their business or for an activity that garners higher returns than the interest they are paying and this way they get access to finance that they otherwise could not have got for short term.
The caveat loan is normally given as mentioned based on the LVR valuation of the real estate asset. You can get 75% or even higher based on the location and market value of the property that is being given as collateral. Do not mistake this for mortgage or house mortgage. That is more long term and the terms are totally different. Short term financing is now possible through the caveat loans. The process is faster and less cumbersome. Businessmen only need to provide a genuine reason for wanting the urgent caveat loan and they can get it by just providing their piece of real estate asset as collateral.