The short answer: a caveat loan is the faster, lighter option for short, urgent needs, while a second mortgage is a registered security that supports larger amounts and slightly longer terms. Both let your company or trust raise capital against property you already own, sitting behind your existing first mortgage. Which one fits comes down to how fast you need the money, how much you’re releasing and how you’ll repay it.
What is a caveat loan?
A caveat loan is short-term funding secured by lodging a caveat on your property’s title. A caveat is a legal notice that records an interest in the property and blocks further dealings — a sale, or a new mortgage — without the caveat-holder being notified. It’s a freeze on the title rather than a registered mortgage, which is exactly why it’s quick to put in place.
Because the security is lighter, caveat loans tend to be smaller, shorter (around one to six months) and priced from about 1.65% per month, subject to assessment. They suit situations where timing is everything: a settlement that has to happen this week, an ATO deadline, an opportunity that closes in days. For the mechanics in full, see what is a caveat loan?.
What is a second mortgage?
A second mortgage is a registered loan that sits behind your existing first mortgage on the title. Unlike a caveat, it’s a registered security in its own right — and that strength is what lets it support larger sums and longer terms, commonly one to twenty-four months, from about 1.45% per month, subject to assessment.
Registering a second mortgage usually needs your first mortgagee’s consent and a deed of priority that sets out how the two loans rank against each other. That step adds a little time compared with a caveat, but it’s also what makes the facility robust enough for a bigger release. See second mortgages for the detail.
Caveat loan vs second mortgage: the key differences
| Caveat loan | Second mortgage | |
|---|---|---|
| Security | Caveat lodged on title (a freeze on dealings) | Registered second mortgage, ranked behind the first |
| First mortgagee consent | Often not required | Usually required (deed of priority) |
| Speed to settle | Fastest — often within days | Fast, but a little longer for consent and registration |
| Typical term | 1–6 months | 1–24 months |
| Typical size | Smaller releases | Larger releases |
| Indicative rate | from ~1.65% / mo | from ~1.45% / mo |
| Combined LVR | up to ~75% | up to ~75% |
Both are business-purpose facilities for companies and trusts, and both are usually capped around 75% combined LVR — the balance of your first loan plus the new one, measured against the property’s value.
When a caveat loan fits
A caveat loan is the right tool when speed is the deciding factor and the amount is modest relative to your equity. It works well for bridging a settlement, meeting a tax or creditor deadline, or funding a short opportunity — anywhere the need is days, not months, and you have a clean near-term exit such as a sale or refinance.
When a second mortgage fits
A second mortgage makes more sense when you’re releasing a larger sum and can give the first mortgagee’s consent for a priority arrangement. The slightly lower monthly rate rewards a longer horizon, so it suits needs that run for several months up to around two years — releasing equity for a project, a restructure, or a larger working-capital position — where the registered security is worth the extra setup.
Speed and cost compared
Caveat loans win on speed because lodging a caveat is light: there’s less to register and consent is often not needed, so funds can be ready in days. Second mortgages take a little longer because of the consent and priority steps, but the stronger security usually buys a slightly lower monthly rate and access to a larger amount.
On total cost, the term matters as much as the rate. A caveat held for a few weeks can be cheaper in dollars than a second mortgage held for many months, even at a higher monthly rate — so the right comparison is the whole cost over your actual timeframe, not the headline percentage.
Which should you choose?
Often the real deciding factors are consent and time. If you have days and a modest release with a clear exit, a caveat loan is usually the cleaner path. If you’re releasing more, can accommodate a priority deed, and have a few weeks of runway and a longer horizon, a second mortgage tends to be the better-structured option.
You don’t have to work it out alone. Lienhouse structures both and weighs which fits your security, amount, timeframe and exit, then arranges the funding and takes it through to settlement. Tell us the amount, the asset and the timeframe, and we’ll come back to you fast.
FAQ
Which settles faster, a caveat loan or a second mortgage?
A caveat loan, usually. Lodging a caveat on title is administratively lighter than registering a second mortgage and arranging the first mortgagee's consent, so caveat funding can settle within days.
Do I need my first mortgagee's consent?
For a second mortgage, usually yes — registering behind a senior loan typically needs the first mortgagee to agree a deed of priority. A caveat often does not require consent, though restrictions on your existing facility can still apply. We confirm the position for your security upfront.
Which one is cheaper?
A second mortgage usually carries a slightly lower monthly rate because the registered security is stronger. On a very short, urgent need a caveat loan can still cost less overall simply because you hold it for less time. The total cost depends on the amount, the term and your exit.
Are these consumer home loans?
No. Both are business-purpose facilities for companies and trusts, secured against property — not consumer credit. We never present them as consumer home loans.