“A mortgage made inferior to the first mortgage and is always subordinate to the first mortgage.”
What does that mean? In general terms a second mortgage is how it sounds, second to your first mortgage on your home or property. If you already have finance from a bank or other lender and you need extra funds then a fast short term second mortgage is what you need. They can also come in the form of caveat.
“Caveat means a document lodged with the Recorder of Titles by a person authorised to do so forbidding the recording of any dealing on the title subject to the caveat Literally means beware. In real estate, it warns persons (prospective purchasers, mortgagees, etc.) who propose to deal in the land that a third person (normally the person lodging the caveat at the Titles Office) has some right or interest in the land.”
What does that mean? If you are looking at borrowing some money behind your first mortgage and need it in a hurry you can find lenders such as Accom Advance that can give you money at lightening speeds compared to a second mortgage lender or any lender for that matter. Caveats are registered on your title just like a normal mortgage.
Why is it so expensive to get a Caveat loan compared to a second mortgage? Caveat loans can be referred to as “emergency loans”, “short term loans”, “bridging finance”, and “rescue loans” etc as you can see there can be many names for this type of finance. The main reason for the higher rates is simply because you generally get money in your account within three days as opposed to four to eight weeks from regular lenders. You pay for the speed, convenience and the risk the lender takes on not being able to completely check your credit worthiness like the banks do.
Let’s look at some common scenarios for using Caveat loans: So you have decided you want some money for some kind of business or investment that you would like or you simply need to refinance another loan or bring your arrears up to date with your first mortgage.
Note: Accom Finance only recommends taking out short term finance/caveat loans if you genuinely require money quickly.
Scenario 1: Cash flow crisis
Steven runs an import/export wine wholesale business and lately demand for his products has increased coming up to the busy Christmas period. Steven has an increase in orders for his most popular wine brand but he runs into a very common problem with business, his other clients’ invoices are not due yet and Steven doesn’t have the cash flow to buy the popular wine from his supplier to on sell to his clients for the festive season.
Steven then is faced with the problem of either not filling the new orders or losing the critical business he needs to grow his company. Steven in rush to get funding approaches his finance broker for the quick money but finds that the bank and other second mortgage lenders with take months so he turns to Accom Finance for a short term caveat loan, secures the money in days and fills the orders for Christmas. Steven then pays the money back with the invoices that were outstanding.
Scenario 2: Funds needed quickly for an investment
“This is the most common scenario we see” ~ Accom Finance. Melissa has been buying and selling properties for over ten years and usually has no problem securing finance from a regular bank.
Melissa has found a great property to purchase and has since entered into a contract to purchase the property. Melissa paid her 10% deposit and already approached the bank to buy the property.
A few months later Melissa’s property is due to settle in seven days, she rings her friendly bank to check if everything is set for the settlement. Melissa is shocked to say the least to find out that the bank won’t be able to make the deadline and will be late by ten days!
Melissa in a scramble not to loose her 10% deposit rings Accom Finance to see if she can get the money to purchase the property. Luckily they could settle within three days and Melissa doesn’t loose her 10% deposit, PHEW!
Melissa isn’t to worried about the interest rate as she has saved her 10% deposit she would have lost and the bank’s finance will pay out the money borrowed, leaving her with a great property and time to look for another great opportunity.
That was just two of our most popular reasons why people borrow money in the form of a caveat loan. There is literally hundreds of reason why you might need money in a hurry. For more information please visit the following pages:
- Recent loan scenarios
- Lending criteria (including examples of loan uses)
So whether you decide to take out a second mortgage or a caveat loan we urge you to call one of our friendly loan officers for a quick chat to see what you qualify for on 1300 652 158 or email accom@accomfinance.com.au
NOTE: Accom Finance ALSO LENDS ON FIRST MORTGAGES.
