Funding from equity you already have.
A second mortgage or caveat loan lets a business owner or investor borrow against the equity in a property that already has a first mortgage on it, without refinancing or disturbing that first loan.
The first lender stays where it is. A second lender takes security behind it. For a business that needs funds quickly, or can't wait for a full refinance, that difference is often the whole point.
We work with private and non-bank lenders who specialise in second mortgages and caveat loans, and we stay across what they're funding right now. If your scenario fits, we can connect you with the lenders it suits.
Both let a lender take security behind a first mortgage. The difference is in how that security is recorded.
A registered second mortgage is lodged on the title and sits formally in second place. It's the more complete form of security, and it usually suits larger amounts and longer terms.
A caveat loan is secured by a caveat: a notice lodged on the title that tells the world someone has an interest in the property. It stops the property being sold or refinanced without that interest being dealt with. Because it can be put in place quickly, caveat lending tends to suit smaller amounts over shorter terms.
The idea is older than most people realise. Australia's title system was built on it. When South Australia introduced Torrens title in 1858, the register itself became the source of truth about who owns land and who has a claim on it. The caveat was the register's warning light: it doesn't create an interest, it protects one. More than 160 years later, that same mechanism is what lets a lender secure funds against a property in days rather than weeks.
A second lender asks a different question from a first lender. It isn't what the property is worth. It's what's left after the first lender is paid.
That makes the combined loan-to-value ratio, the total of all debt secured against the property compared with its value, the number that matters most. After that, lenders look at the first mortgage itself: who holds it, whether it's up to date, and what its terms allow. Many first mortgages require the first lender's consent before further security is registered, so lenders will want to know what yours says.
Then, as with any short-term loan, the exit. A clear, supported plan for how the loan will be repaid does more for an application than almost anything else.
Second mortgages and caveat loans are priced above first mortgages. The reason is structural, not arbitrary: in a sale, the first lender is repaid first, so the second lender carries more risk and is priced for it. Terms are short, interest is often prepaid or capitalised, and there are usually establishment fees.
Getting indicative terms costs you nothing, and any fees are agreed with you up front, before any work starts.
This page is general information only. It isn't financial, credit or legal advice and doesn't take into account your particular circumstances. Lending decisions are made by the lender.
Pocket compass, 19th century Taking a bearing before setting out.
Not quite. Both are secured behind an existing first mortgage. A second mortgage is formally registered on the title, while a caveat loan is secured by a caveat, a notice on the title that protects the lender's interest. Caveat loans can usually be put in place more quickly and tend to suit smaller, shorter-term needs.
Across our lender network, second mortgages and caveat loans go up to $25m. How much a lender will advance depends mainly on the property's value and the total debt already secured against it, known as the combined loan-to-value ratio.
It depends on the terms of your first mortgage. Many require the first lender's consent before further security is registered. Lenders will want to know what your first mortgage says, so it helps to have a copy of the loan terms handy.
It depends on the lender, the valuation and how complete the information is. Caveat loans are often chosen because they can move quickly when the scenario is clear, and the earlier we hear about it, the more options there are.
Business and investment purposes only, such as working capital, clearing a tax debt, a deposit or settlement gap, or covering a need while a refinance is in progress. We don't arrange consumer loans at PLG, but our trusted brokers do.
Often, yes. Private lenders assess the property, the equity and the exit rather than applying a bank's fixed rules. Every lender has its own criteria, and the lender makes the credit decision.
Usually in one amount at the end of the term, from a sale, a refinance of both loans, or funds from the business. Lenders will want to see a clear, supported plan for that exit before they lend.
