If you own your own home then you have the option to take out a caveat loan. This essentially works like a second mortgage for you, where your home is secured against the loan. The great thing about these loans is that they are quick to be approved, don’t rely on your credit score and no valuation is necessary. So are caveat loans the right option for you, and when might you consider taking one out?
What are Caveat Loans?
Let’s dig a bit deeper into what exactly a caveat loan is. These are short-term business finance loans, which enable you to access funding which secured against another property you own. They have a very quick turnaround time, usually within 24 hours of applying, and it doesn’t rely on a good credit score to take out.
These loans can be used for a number of different purposes:
- Purchasing additional real estate: you may be wanting to expand your portfolio of properties. This can be hard to do when your current money is tied up in an existing mortgage. Caveat loans allow you to borrow against the current property so you can invest in another. As this is a short-term loan, you still need to come up with the money to pay this deposit back. It may be worthwhile looking into taking out an equity loan instead, which allows you to borrow against your home’s equity.
- Business development: you may be interested in taking out a short-term loan to give your business a boost. Whether there is a big-ticket item you want to purchase, or you simply need to invest more dollars into marketing to get you off your feet. Either way, it is important to plan how you intend to pay off this loan.
- Renovations: got some home renovations in the works? A caveat loan can free up some cash straight away to get your project started while you work on freeing up funds from elsewhere to pay it off. It acts as a quick cash injection to get the ball rolling.
Advantages of Caveat Loans
There are many great things about taking out caveat loans. These include:
- Quick access to cash with a 24-hour turnaround, which means you can have the money with you almost instantly.
- Doesn’t rely on a good credit score. If you have a bad credit score and are unable to take out other loans as a result, this is a great option or you.
- Can be used for your own personal reasons. You get to choose where these funds go, it is up to you to ensure they are just paid back on time.
- As soon as you repay the funds, you are released from the loan. This makes it nice and easy to deal with and no strings attached.
Disadvantages of a Caveat Loans
Of course, there are some significant disadvantages to consider as well:
- There are short-term loans, often with a high-interest rate. They are intended to be paid back quickly, which means you must have a plan to get the funds in the works before taking one out.
- There are often additional fees and charges to consider when taking out a caveat loan.
- They are quite restrictive due to the length of the loan term. If you are looking to boost your business or buy a new property, it can often be more worthwhile looking into other loan options that are more long term.
Should I Take Out a Caveat Loan?
This all depends on your circumstances. If you have a bad credit score and need the cash fast, but know you can pay it off, then caveat loans can be a great option to tide you over. On the other hand, if you are looking for a longer period to pay back the loan, then it may be worth looking into other loans on offer to see if another one would work better for your situation.
How To Take Out A Caveat Loan
It is generally a very quick process. Once you decide on a lender, you are often required to fill out a form, online or in person. There is very little documentation involved and it can often be done in less than five minutes. Therefore, the whole process is fairly straightforward and quick. After your application is approved, funds are often sent through to you within 24 hours. This fast turnaround time is one of the biggest advantages of this type of loan.
Talk To The Experts
If you are still having trouble deciding what the best option for you is, then speak to the experts. The team at Bad Credit Loans can talk you through your options and help find the best solution for your situation. Give us a call today.