Caveat loan or mortgage

A caveat loan or mortgage is a type of finance arrangement whereby money is lent from a lender to a borrower on the basis that the lender is entitled to lodge a caveat against the title of the real property as security. These types of loans will rank second behind a registered mortgage on a property and are usually short term.

The drawback of using a caveat loan or mortgage is that the interest rates charged by lenders are significantly higher than those charged by a bank for a regular loan.