Quick answer
Caveat loans are short-term by design — usually weeks to months, sized around a specific exit such as a sale, refinance or large payment. The right term is your realistic exit date plus a buffer for delays. If the exit is more than a year away or its timing is genuinely uncertain, a registered second or first mortgage is usually the better structure.
Key points
- Set the term from the exit date, then add a buffer.
- Interest is usually prepaid or capitalised, so there are often no monthly repayments.
- Extensions are possible on some loans but cost a new fee plus more interest.
- If the exit is a year or more away, look at a registered mortgage instead.
- Check minimum-term charges if you might repay early.
- Typical term
- Weeks to months
- Repayments
- Often none until the end
- Longer need?
- Consider a registered mortgage
- Loan range
- $20k – $5m
A caveat loan is a sprint, not a marathon. Its whole design — a light security, fast set-up, interest usually handled up front — assumes the money will be repaid from a specific event in the near future. Getting the term right is the difference between a clean, useful loan and one that costs more than it should.
How short is “short-term”?
Typically weeks to months. There’s no single standard, because the term is set around your exit rather than a calendar. A settlement bridge might need six weeks. A wait for a large progress payment might need four months. A property sale that hasn’t yet been listed might need longer.
What matters is that the term has a reason. If you can’t point to the event that will repay the loan, the term is a guess — and guesses are expensive.
How do you set the term?
Use a simple formula:
Term = realistic exit date − today + buffer
| Exit | Realistic timing question | Suggested buffer thinking |
|---|---|---|
| Sale with exchanged contracts | When is settlement due? | Allow for a delayed settlement |
| Sale not yet listed | How long do similar properties take to sell and settle locally? | Generous — marketing takes time |
| Refinance to a bank | When will the approval be unconditional and settle? | Allow for valuation and document queries |
| Customer or progress payment | When is it due, and how does this customer pay in practice? | Allow for slow approvals and disputes |
| Tax refund | When was the return lodged? | Allow for processing and offsets |
Keep the buffer honest. The cost of a few extra weeks is usually far less than an extension fee plus more interest, and far less than the stress of a due date you can’t meet.
What happens to repayments during the term?
Most short-term caveat loans don’t require monthly repayments. Instead the interest and fees are:
- prepaid from the advance, which means you receive less cash upfront; or
- capitalised, which means the balance grows and the exit repays more.
This frees your cash flow while you wait for the exit. It also means the loan amount needs to be large enough to cover the cash you need plus these costs. The costs page shows the arithmetic.
What if you might repay early?
Ask the question before you sign. Many loans have a minimum interest period, so repaying after two weeks may still cost a month or more. Ask for the payout figure at a few points — say one month, halfway and at maturity — so you can compare quotes fairly.
To see how term, amount and exit interact, run the Feasibility Checker. If your exit date is already clear, send us the details and we’ll suggest a term.
When is a short-term caveat loan the wrong tool?
- The exit is more than about a year away. A registered second or first mortgage is built for that; see caveat vs second mortgage.
- There isn’t really an exit. If the plan is “the business will be better by then”, a caveat loan can turn a cash problem into a property problem.
- The equity is thin. Short terms don’t fix a stretched LVR.
- You need a revolving facility. For ongoing working capital, a line of credit or other cash-flow product may suit better.
How does the term interact with the caveat itself?
The caveat stays on title for the life of the loan and is withdrawn when you repay. Registry rules about how long caveats last — Titles Queensland notes most run somewhere between 14 days and three months, longer where court action is involved — are aimed mainly at disputed caveats. A lender’s caveat that the owner has consented to supports the loan until it’s repaid. If you’re curious about the registry side, see what a caveat on title does.
An illustrative term decision
Illustrative only.
A Sunshine Coast landscaping business has won a council contract and needs $95,000 for plant and materials. The first payment claim is due in about 10 weeks, and the council typically pays within its standard terms after approval. The owners choose a five-month term, not three, because the first claim may need revisions. They repay in month four from the second claim and the extra month costs far less than an extension would have.
A quick checklist for choosing your term
- I know the specific event that will repay the loan.
- I know the realistic date of that event, not just the best case.
- I’ve added a buffer for delays I can’t control.
- I know the minimum interest period and the cost of repaying early.
- I know what an extension would cost and when I’d need to ask for one.
- I have a fallback exit if the main one slips badly.
If you can tick every line, your term is probably right. If you can’t tick the first two, a short-term caveat loan may not be the right structure yet — talk to us about the alternatives.
Want help setting the right term?
Tell us what the money is for, when the exit lands and how confident you are in that date. We’ll suggest a term with enough breathing room — and flag if a different structure would serve you better.
The enquiry is about a minute long and doesn’t touch your credit file. Nobody else gets your details; a specialist reads them and calls you back. Be candid about the exit timing — optimism on the form becomes a problem at maturity.
Frequently asked questions
What's the shortest term available?
Some caveat loans run for only a few weeks, for example to bridge a settlement. Check the minimum interest period, because very short loans can still be charged for a minimum number of weeks or months.
Do I make monthly repayments on a short-term caveat loan?
Often not. Interest is commonly prepaid from the advance or capitalised into the balance, and the whole amount is repaid at the end from the exit.
Can I extend if my exit is delayed?
Sometimes. It depends on the lender, the equity and why the exit is late. Extensions usually cost an extension fee plus more interest, so build a buffer in from the start.
Is a short term always cheaper?
Fewer months usually means fewer dollars of interest, but only if you actually repay on time. A term that's too short can cost more than a slightly longer one once extension fees are counted.
When should I choose a second mortgage instead?
When the exit is further out — a year or more — or when it depends on something like future financials. A registered second mortgage is built for longer terms.