FAQ's

FREQUENTLY ASKED QUESTIONS

Caveat Loans

WHAT IS A CAVEAT LOAN?

Caveat Loans which are designed to settle within 24 hours of receiving your applications.    We do not look at the applicants income or credit history... we simply look at the equity in the real estate being offered as security, the business purpose, and the exit strategy.

WHY PEOPLE TAKE OUT CAVEAT LOANS....  here are some real life examples....

CASH FLOW CRISIS.

We had a plastering firm who had secured a big job, and to secure the big job the director gave 90 day terms to the project builder.   The plasterer had 13 other plasterers on site working for him, and at around day 40 of 90, he ran out of money to pay wages.   It was a union controlled site, so if no wages were paid, apart from having upset employees, they would be kicked off site.    Payday was a Friday and he came to us on a Thursday.  We loaned him $65000 for 2 months, and secured the debt against his house in Kew.   In 2 months time, he paid us back when he got paid for the job.    OUTCOME:  We saved his bacon.

    MAXIMISE PROFITS.

    We have recently funded a doctor who needed access to $450,000 to buy medical equipment.   The money he would have otherwise had to pay for this new consignment was not yet due and payable from the companies who he had sold his last consignment to.   This new consignment would see him make 300% markup inside 2 months, so to pay between 4% and 6%per month to get immediate access to the funds for 2 months was a small price to pay in order to make a large profit.   We will get paid back from the realized income from the sale of either consignment one or two, or from a refinance of his property portfolio… whichever occurs first.

      OPPORTUNITY TOO GOOD TO MISS.

      We have had a variety of importers and retailers who have got onto a shipment of goods that they can buy off price if they pay cash in the next few days.   These goods are not stolen.  It is a straight forward commercial transaction where a manufacturer wants to clear old stock at a dramatically reduced price.    When a retailer or importer can make 200% mark up or more as a result of getting their hands on this stock, paying between 4% and 6% a month for 2 months in order to get the money in 24 hours makes good business sense…. Rather than miss out on the deal, and the profits.

        CONSOLIDATION.

        We have many commercial property investors who for one reason or another have fallen behind in their repayments.   In order to refinance at a competitive rate, they need to bring their mortgage/s up to date.    This is where we come in.   As long as there is enough equity in the security properties, we will not be concerned about the fact that their first mortgage is in arrears…..However we will pay the funds directly to the first mortgagee to bring the loan up to date.  (in these cases we do not advance the funds to the borrower)     Often the client may have left things until the last minute, and situation is that critical that the first mortgagee is ready to send the sheriff around to evict.   This is where the need for fast service is paramount.  Naturally we need to see an exit strategy from the client (ie: refinance, sale of the property or another asset), and the loan must not be for residential properties, or fall under the new NCCP. 

          THERE ARE MANY OTHER REASONS why people take out short term caveat loans. They could need access to funds in 24 hours to….

          1. Pay off an overlooked or overdue creditor or tax debt 
          2. Fund a short fall on a business purchase or commercial property settlement
          3. Provide business cash flow due to an unexpected downturn
          4. An urgent advance on a pending refinance or property sale

          We will lend for any worthwhile business or commercial investment purpose, as long as there is enough equity in the property (our max LVR is 75%), and as long as there is an Exit Strategy.  (i.e.:  sale of the property, refinance, or payment from a trade debtor, etc)

          WHY DON’T THE BANKS OR FINANCE COMPANIES FUND CAVEAT LOANS?

          Basically it comes down to speed, and in many cases, lack of financial records.    If the borrower can wait 2 months, the bank can refinance them.   If the borrower can wait 2 weeks, AND THEY HAVE FINANCIALS SHOWING GOOD CASHFLOW AND PROFIT RESULTS, they will get an overdraft or business loan.  

          However if you need cash TOMORROW, they come to us.   

          Still not convinced???   Then ask yourself…. if I needed access to a large sum of money by tomorrow (leaving out rich uncles, etc), how would you get it?   

          WHAT SETS HOMESEC APART FROM OUR COMPETITORS?

          1. SPEED.   We are virtually the only short term caveat lender who CAN physically settle within 24 hours.   Many say they can, but their business practices and lack of resources makes it impossible.

          2. SERVICE.   We issue letters of offers on approved loans within 2 working hours, and legal contracts within 5 working hours once the offer has been accepted by the borrower.   We don’t require valuations, A&L statements, financial records, etc.  Our staff keep the clients and brokers in the loop at every stage of the 24 hour process.

          3. INNOVATIVE PRACTICES.   We email our loan contracts, rather than the 20th Century way of posting them, which could take 2 – 3 days to arrive.   In addition, we settle by Telegraphic Transfer… not by cheque or internet transfer.   This means the money hits the borrowers account as cleared funds within 2 working hours.

          4. WE ARE THE LENDER.  As we hold the funds that we lend out, we don’t have to go off and broker the deals to investors or other lenders.

           

          WHAT IS ASTLA?

          (It is your protection!)

          ASTLA is the Australian Short Term Lenders Association, of which HomeSec is proud to be a founding member.   The role of ASTLA is to self regulate the short term finance industry to ensure the highest standard of disclosure & professionalism by it's members.  Only genuine private lenders, caveat lenders and 2nd mortgage lenders who operate geniune finance companies may become members of ASTLA, and all must adhere with a strict Code of Conduct.   For your peace of mind when borrowing money short term, ONLY deal with an accredited member of ASTLA.

           

           

           

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