Quick answer
The main alternatives to a caveat loan are a registered first mortgage (best when the property is unencumbered or you're refinancing anyway), a registered second mortgage (longer terms behind a bank loan), security over a guarantor's property, security over business assets registered on the PPSR, and unsecured cash-flow lending for trading businesses. The right one depends on your equity, term, deadline and exit.
Key points
- If the property has no mortgage, a first mortgage may be as quick as a caveat and stronger security.
- Longer terms usually point to a registered second mortgage rather than a caveat.
- Land is secured on the title register; business assets like vehicles and equipment are secured on the PPSR.
- Trading businesses without property may qualify for unsecured options, typically $5k to $500k.
- The best structure is the one that fits your exit, not simply the fastest one.
- Property-secured range
- $20k – $5m
- Unsecured range
- Typically $5k – $500k
- Land security register
- State land titles office
- Other asset register
- PPSR (personal property)
A caveat loan is a specialised instrument. It’s brilliant for one job — fast, short-term funding against property equity with a clear exit — and ordinary at others. Before you commit to one, it’s worth seeing the whole toolbox. business.gov.au sums up the basic split: secured loans are backed by assets the lender can claim if the loan isn’t repaid, while unsecured loans rely on the business’s capacity to repay.
What are the main secured structures?
| Structure | What secures it | Where it’s recorded | Suits |
|---|---|---|---|
| Caveat loan | Loan agreement charging property | Caveat on the land title | Urgent, short-term, clear exit |
| Second mortgage | Registered mortgage behind the first | Land title | Longer terms behind a bank loan |
| First mortgage | Registered mortgage in first place | Land title | Clear titles, refinances, larger or longer loans |
| Guarantor property | Someone else’s property plus their guarantee | Land title (caveat or mortgage) | Borrowers without enough equity of their own |
| Business-asset security | Security interest over vehicles, equipment, stock or all present and after-acquired property | PPSR | Asset finance and some working-capital loans |
When does a first mortgage beat a caveat?
When the property is unencumbered or when you’re refinancing the existing loan anyway. A registered first mortgage gives the lender the strongest position, so it can support a larger amount relative to value, and the per-month cost is often lower. If the title is clear and you have a day or two, ask about both.
The other case is when you need a longer runway. A caveat loan is built around an exit that lands soon. If yours is a year or more away, a first or second mortgage is usually a better fit. Compare the two registered options on our caveat vs second mortgage page.
Can someone else’s property secure your loan?
Yes. Plenty of business owners rent their home or have little equity, while a parent, spouse or business partner has plenty. The owner of that property can guarantee your business’s loan and support the guarantee with a caveat or mortgage over their title.
This works well when everyone understands the deal. It works badly when a guarantor signs under pressure. Lenders will want the guarantor to receive independent legal advice, and they will ask what the guarantor gets out of it. If the property sits in a trust or company, see property owned by a trust or company.
What about security over business assets instead of property?
Business assets such as vehicles, machinery and stock are personal property, which is secured on the Personal Property Securities Register (PPSR) rather than a land title. AFSA describes the PPSR as the national register where security interests in personal property can be registered and searched, and it defines personal property as any form of property other than land.
Equipment finance and some working-capital facilities are secured this way. The catch for urgent funding is that business assets are usually worth less to a lender than land, and a general security agreement over “all present and after-acquired property” can complicate future borrowing. For a fast, larger amount, property is usually the stronger lever.
Weighing options right now? Put your figures through the Caveat Loan Feasibility Checker or tell us what you need and we’ll compare structures for you.
When is unsecured lending the better answer?
If you’re trading, have steady deposits in your bank statements and need a modest amount, an unsecured or cash-flow facility may be simpler. These are typically $5,000 to $500,000, sized on turnover and bank statements, and same-day funding is possible for smaller amounts. There’s no property on the line.
Unsecured options stop making sense when:
- the amount is large relative to turnover;
- trading has dipped (the very reason you may need funds); or
- the business is new or between contracts.
That’s where property equity fills the gap. See the stock and supplier page for a side-by-side example.
How do you choose between them?
Work through five questions in order:
- What’s the deadline? Hours or days favour caveat or unsecured options.
- How long do you need the money? Months favour a caveat; years favour a registered mortgage.
- What equity is available, and whose? Your own, a guarantor’s, or none.
- What’s the exit, and how certain is its timing? Certainty supports short structures.
- What’s the total dollar cost over the realistic term? Compare like with like, including set-up and exit costs.
How does one need look under each structure? An illustrative comparison
Illustrative only.
A Cairns tour operator needs $180,000 to refit a vessel before the peak season. The owners have a home worth about $820,000 with $300,000 owing, and a solid trading history.
- Caveat loan: fast; secured over the home; repaid in a few months from peak-season income. Suits the timing if the refit must start this week.
- Second mortgage: a little slower; better if the owners want to repay over a year or two rather than one season.
- Bank top-up or first-mortgage refinance: likely the lowest cost per month, but only if the bank can approve in time for the refit.
- Equipment or asset finance over the vessel: possible, registered on the PPSR; depends on the vessel’s value and the lender’s appetite for marine assets.
- Unsecured loan: possible for part of the amount, sized on turnover and bank statements.
The right answer depends on the deadline and how quickly peak-season income will arrive. Same need, five different structures — which is why we ask about timing and exit before recommending anything.
Want the structure chosen for you, properly?
Choosing the wrong structure costs money twice: once to set it up and again to replace it. We’d rather get it right first time.
The enquiry takes about a minute and doesn’t involve a credit check. We won’t farm your details out to a list of lenders; a specialist reviews your property, deadline and exit and recommends one path, even if that path isn’t a caveat. Accurate answers on value, debts and timing make the recommendation sharper.
Frequently asked questions
If my property has no mortgage, should I still use a caveat?
Not necessarily. With a clear title, a registered first mortgage can be arranged quickly and gives the lender stronger security, which may mean more borrowing capacity. A caveat still makes sense when the loan is very short and speed matters above all.
Can I use someone else's property?
Yes, if they agree. A family member or business partner can guarantee the loan and support it with a caveat or mortgage over their property. They should get independent advice, because their property is on the line.
What's the PPSR and does it apply to property?
The Personal Property Securities Register is the national register for security interests in personal property, which the register defines as any form of property other than land. It covers things like vehicles and equipment. Land is secured through the state title registers instead.
Is an unsecured business loan faster than a caveat loan?
For smaller amounts it can be — same-day funding is possible for smaller unsecured amounts. But unsecured loans are sized on turnover and bank statements, so the amount available is usually smaller than property equity would support.
What if none of these structures fit?
Then the answer might not be a loan. Selling an asset, negotiating a payment arrangement or bringing in a partner can be better. We'll tell you if borrowing isn't the right move.