What is a Caveat?

A Caveat provides a fast and seamless means of settling a short-term loan. Secured by way of a registered Caveat, this facility is available to any homeowner that wishes to retain their existing 1st mortgage and 2nd mortgage but require a short-term line of funding beyond their current credit providers capacity. Short-term Caveat loans are generally only available for business purposes.

Caveat loans are basically like a mortgage or charge over one or more of your properties. You receive funds and the lender puts a charge over your property to secure the repayment of the debt. They are typically behind another mortgage over your property.

Caveat loans are usually used for real estate dealings or business dealings. If you are stuck in the short-term requiring funding and settlement of a pending matter will take months, Caveat loans can come to the rescue in providing you with the cash required, secured over your new or existing property. Caveat loans are often borrowed by property owners, project managers, businessmen or other borrowers who realise they cannot afford to miss out on funding.

What is a 2nd Mortgage?

A 2nd mortgage is actually not a loan as most people would think. It is a registrable form of security that can guarantee the payment of a debt or loan. A 2nd mortgage creates a security interest (legal claim) in the property with the home owner (also known as the mortgagor).

A 2nd mortgagee (the lender in a mortgage, typically a bank or private lender) does not have title to or possession of the property. But if a borrower (aka mortgagor) is in default on a loan, the lender (aka mortgagee) can exercise certain remedies if the borrower defaults.

An unregistered mortgagee does not automatically have statutory powers to sell the property as a registered mortgagee. It is not uncommon for banks and lenders (mortgagees) to send borrowers with letters of demand requesting payment of the loan before seeking to enforce their rights through court.

The following remedies are available to a mortgagee when the 2nd mortgagor defaults:

• Take possession of the property occupied by a tenant by giving the tenant a written notice explaining that the mortgagee is taking possession and that the tenant now pays the rent to the mortgagee; or
• Bringing Court proceedings against the mortgagor for:

possession of the property

selling the property

obtaining a monetary judgment

obtain an order for foreclosure

If you would like to know more about 2nd Mortgages and Caveats and how they operate or effect you, you are urged to seek your own legal advice.

The National Consumer Credit Protection Act 2009, or NCCP, is legislation that's designed to protect consumers and ensures ethical and professional standards in the finance industry. Lenders and mortgage brokers must hold a credit licence or be registered as an authorised credit representative. The NCCP is regulated and enforced by ASIC in accordance with the National Credit Code(NCC).

What is a Regulated loan? - As a general rule, almost all home loan types and applications are regulated under the Act. The rules for this are complicated, however, a loan is likely to be regulated if the borrower is a natural person, a charge is made for providing the credit and the credit provider provides the credit in the course of a business. The credit is provided wholly or predominately for personal, domestic or household purposes. Or to purchase, renovate or improve residential property for investment purposes. Or to refinance credit that's been provided wholly or predominately to purchase, renovate or improve residential property for investment purposes. This means that most standard home loans are regulated under the NCCP Act.

What is an Unregulated loan? - There are exceptions that aren't regulated by the NCCP Act. Home loans that are unregulated include loans in the name of a Company (i.e. not to a 'natural person') or loans used predominantly to invest in commercial property, shares or a business.

The NCCP does not apply to certain loans including low cost short term credit that is 62 days or less. However, the NCCP does apply to a loan of less than 62 days if fees and charges exceed 5% of the amount of the loan or if the interest rate exceeds 2% pcm or 24% p.a.

Don't risk wasting your money, time and fees by being declined by other lenders - call us today on 02 8357 7088!

All private lenders across Australia require you to have legal advice before any funds are handed over. Each lender has a preferred legal firm. Legal firms are generally located in Sydney.

Immediately after your loan is approved by one of Private Lending Holdings's private lender's, instructions are issued to the lender's preferred legal firm to prepare the loan agreements and checklists.

When the loan agreement and checklist has been created, the pdf's are emailed to your nominated lawyer or solicitor. Your lawyer or solicitor is instructed to print off the documentation and make an appointment for you to attend their office.

Before meeting with your nominated lawyer or solicitor, you will be requested to bring with you checklist items. These items usually include photo identification i.e drivers licence and passport and/or birth certificate, both council and water rates notices with confirmation that all instalments have been made, certificate of currency (not applicable for strata) with the lender's name on it (lender will provide the names), land tax statement (your solicitor often provides this), deposit slip or bank letter confirming the account your equity release funds are to be credited to etc.

Because of increasing fraud being continuously discovered, each lender has specific requirements they expect their legal firms to undertake.