How much can you borrow on a caveat loan?

The first number a caveat lender wants is not your turnover or your credit score. It’s the equity in the property and what’s left of it after the new loan. Get comfortable with one ratio and you’ll understand most of the answer before you ring anyone.

What is combined LVR?

LVR stands for loan-to-value ratio. For a caveat loan, lenders use the combined version:

Combined LVR = (every debt already secured on the property + the new loan) ÷ the lender’s valuation

“Every debt” means the payout figure on your first mortgage, any line of credit or redraw limit secured on the same title, and anything else already recorded against it, including existing caveats. A title search shows what’s registered; see our guide to reading a title search.

What does that look like in dollars?

Illustrative examples only.

	Example A: Adelaide home	Example B: Perth warehouse	Example C: Two properties
Lender’s valuation	$850,000	$1,400,000	$700,000 + $600,000 = $1,300,000
Existing secured debt	$420,000	$610,000	$380,000 + $0 = $380,000
New caveat loan (incl. costs)	$90,000	$300,000	$400,000
Combined debt after loan	$510,000	$910,000	$780,000
Combined LVR	60%	65%	60%

In Example C, neither property alone would comfortably carry $400,000 behind the first home’s mortgage, but pooling the second, unencumbered property brings the combined position back into a comfortable range.

What limits do lenders actually apply?

There’s no single industry number. Each lender has its own appetite, and it shifts with:

• Property type. Standard residential property is usually easiest. Commercial and industrial property is widely accepted but valued more cautiously. Vacant land, rural holdings and specialised buildings (a childcare centre, a service station) are harder. Read more on residential and commercial security.
• Location. Metropolitan and major regional markets sell more predictably than remote ones.
• The exit. A signed contract of sale or a bank approval supports a higher figure than a plan to “refinance later”.
• The term. Shorter is safer for the lender.
• Existing caveats or disputes. Anything unusual on the title needs explaining.

As a working guide, our Feasibility Checker grades combined LVR in bands — comfortable, workable, tight and stretched. These are the checker’s own indicative bands, not any lender’s policy, but they reflect how the conversation usually goes.

How do you work out your own number?

1. Start with a realistic value. Use a recent valuation, a written agent appraisal or recent comparable sales, not the figure you’d love to get.
2. Get payout figures, not balances. Your statement balance may exclude accrued interest or redraw.
3. Size the loan on cash needed plus costs. Ask for the total cost of finance and add it if it will be prepaid or capitalised. The costs page shows how.
4. Divide. Combined debt ÷ value.
5. Leave a buffer. Values move and valuations come in lower than owners expect.

Short on time? The feasibility checker does the arithmetic for you, or you can send us the figures and let a specialist do it.

What if the numbers are tight?

A tight combined LVR doesn’t automatically mean no. The usual levers are:

• Borrow less now. Cover the urgent part and fund the rest from the exit.
• Add security. A second property, or a guarantor’s property.
• Strengthen the exit. A signed contract, a bank pre-approval or confirmation of a receivable.
• Shorten the term. Less interest, and less risk for the lender.
• Mix structures. Part caveat-secured, part unsecured if the business trades strongly.

And sometimes the honest answer is that there isn’t enough equity for a caveat loan to make sense. We’ll say so, and point to anything that might work instead.

Is it worth checking your equity before you need it?

Yes. Owners who know their combined LVR, have a current payout figure and keep a recent appraisal on file are the ones who can move in hours rather than days. Our what slows a caveat loan page lists the other things to have ready.

What are the most common LVR mistakes?

1. Using the balance instead of the payout figure. The payout is usually higher.
2. Forgetting a line of credit or redraw limit. Some lenders count the full limit.
3. Leaving out loan costs. Prepaid or capitalised interest and fees are part of the loan.
4. Using an optimistic value. A three-year-old sale price, or the highest nearby sale, isn’t a valuation.
5. Ignoring other items on title. Existing caveats and second mortgages count too.
6. Counting on property you don’t own. A spouse’s or relative’s property only helps if they agree to be part of the loan.

Each of these tends to surface late in an application, when it’s hardest to fix. Getting them right at the start means the number you see in the checker is close to the number a lender works with.

Find out what your property can support

A two-minute conversation beats guessing. Share the property, the value you believe is realistic, what’s owing and what you need.

The form takes about a minute and there’s no credit check to enquire. We don’t forward your enquiry to a crowd of lenders — one specialist looks at the equity, the exit and the timing, then calls you with a straight answer. Honest figures for value and debt give you an honest answer back.

See what your equity supports →