Who it may help
Possible fit
- Business owners with property equity who need to move quickly
- Owners waiting on a first lender's consent to a second mortgage
- Businesses a bank has declined or cannot fund in time
Caveat loans NZ
Caveat loans for New Zealand business owners
A caveat loan is secured by a caveat on the property's record of title rather than a registered mortgage. HomeSec is a direct, privately funded lender of open-term, property-secured business loans from $20,000 to $1,000,000, and can consider caveat-secured loans for genuine business purposes. Funding may be possible in as little as 24 hours, subject to approval, documents, security and legal work.
Appropriate uses
Business needs
- IRD and GST obligations
- Urgent supplier or creditor payments
- Business opportunity deposits
- Covering a settlement or payment gap
Consider carefully
Important factors
- A caveat protects a claim; it is not a registered mortgage
- Independent legal advice is essential before you sign
- A clear repayment plan is part of the assessment
What is a caveat loan?
A caveat is a notice on a property's record of title that someone claims an interest in the land. Under section 138 of the Land Transfer Act 2017, a person claiming an interest, such as a lender whose loan agreement gives it a charge over the property, can lodge a caveat against dealings with Land Information New Zealand (LINZ). While the caveat is in place, most other instruments, such as a transfer or a new mortgage, cannot be registered without the caveator's consent.
A caveat loan uses that protection as the lender's security. The loan agreement records the promise to repay and the charge over the property, and the caveat warns anyone dealing with the title that the lender's claim exists. A caveat does not transfer ownership of the property, and it does not give the lender a registered mortgage.
Caveat loan or second mortgage?
A registered second mortgage sits on the title behind the first mortgage and gives the lender a registered interest. Registering one often needs the first lender's consent, which can take time. A caveat can often be lodged sooner, which is why caveat loans are popular when a deadline is close.
The trade-off is certainty. A caveat protects an unregistered claim, so lenders often treat it as lighter security, and a registered mortgage can make a later sale or refinance more straightforward for everyone. HomeSec lends as a registered first or second mortgage and can consider a caveat where it fits, so we can tell you early which suits your scenario. Some borrowers start with a caveat to meet a deadline, then move to a registered second mortgage once consent comes through.
Before you sign: checks and how a caveat comes off
Caveat loans move quickly, so the checks matter. Get independent legal advice on the loan agreement and the charge, and make sure you understand the interest, fees and default terms, the payment settings and what happens if your repayment plan takes longer than expected. Ask your lawyer to check whether your existing mortgage restricts further borrowing against the property.
When the loan is repaid, the lender withdraws the caveat under section 144 of the Act and the title is clear of it. A registered owner can also apply to LINZ to lapse a caveat under section 143; the caveator then has 10 working days to tell LINZ it has applied to the High Court, or the caveat lapses. A person who lodges a caveat without reasonable cause can be liable for the loss it causes. LINZ does not decide whether a claimed interest is valid; disputes go to the courts.
How the assessment works
Purpose, property and repayment path.
A useful scenario is not only a requested amount. It connects the business need to suitable security and a realistic way for the facility to be repaid or refinanced.
- 1. Explain the opportunity.
Provide the amount, intended use and timing. - 2. Outline the property.
Share ownership, location, estimated value and current lending. - 3. Show the exit.
Describe how and when repayment or refinance is expected. - 4. Review terms and risks.
Understand the documents, total cost, obligations and alternatives before proceeding.
Top tips for a faster, smoother assessment.
The right level of documentation depends on the proposed structure and what the team needs to verify.
Identity, property ownership, existing lending, the source and use of funds, and the proposed exit may all need evidence. Legal work can also apply.
Raise difficult details early. Tax obligations, arrears, a recent credit event or an urgent deadline can be assessed more effectively when they are explained upfront.
Common questions
What business owners usually ask next.
What is a caveat loan?
A caveat loan is a business loan secured by a caveat on the property's record of title instead of a registered mortgage. The caveat records the lender's claimed interest and stops most other dealings being registered until the loan is repaid and the caveat is withdrawn.
Caveat loan or second mortgage: which is faster?
A caveat can often be lodged sooner than a second mortgage can be registered, because a second mortgage may need the first lender's consent. With HomeSec, both start the same way: send the property address, its estimated value, what is owing on it and how much you need. Funding may be possible in as little as 24 hours once the scenario is complete and the security is acceptable, and we will tell you early which structure fits.
How much can I borrow with a caveat loan?
HomeSec lends $20,000 to $1,000,000 for a business purpose. The amount for your scenario depends on the property's value, what is owed on it, the business purpose and how the loan will be repaid. No valuation is needed to start an enquiry.
How quickly can a caveat loan be arranged?
Funding may be possible in as little as 24 hours, subject to approval, documents, security, legal work and settlement requirements. Having the property details, ownership and your repayment plan ready helps the team move faster.
Can I get a caveat loan with bad credit?
A credit issue does not automatically rule you out. HomeSec looks at the business purpose, the property security and the wider situation. Tell us about any defaults, arrears or tax debt upfront so they can be assessed properly. Approval is never guaranteed.
Does my bank have to agree to a caveat?
Lodging a caveat does not usually need the first lender's sign-off in the way registering a second mortgage can. However, many first mortgages restrict further borrowing against the property, so your lawyer should check your existing mortgage terms. HomeSec checks this during assessment too.
Do I have to make payments during a caveat loan?
HomeSec loans are open term, and an approved facility may offer up to six months with no scheduled payments. Interest and other costs still accrue. The exact payment settings are set out in your loan contract, so read it carefully before you sign.
How is a caveat removed when the loan is repaid?
Once the loan is repaid, the lender withdraws the caveat under section 144 of the Land Transfer Act 2017 and the title is clear of it. Repayment usually comes from a property sale, a refinance or business cash flow.
Can I move from a caveat loan to a second mortgage?
Often, yes. Some borrowers use a caveat to meet a deadline, then move to a registered second mortgage once the first lender consents, or refinance with a bank when their accounts catch up. Plan the repayment route from the start.
What can a caveat loan be used for?
Genuine business or commercial purposes, such as IRD and GST, suppliers, stock, equipment or a business opportunity. HomeSec does not lend to buy or renovate your own home, or for personal spending. We are based in Auckland and lend against suitable property almost anywhere in New Zealand.
Related pathways
Compare the nearby options.
Information is general only and is not an offer or approval of finance. Lending is subject to assessment, acceptable property security, documentation, legal requirements and final approval. Independent legal, financial and tax advice may be appropriate for your circumstances.
Next step
Discuss a caveat loan or second mortgage scenario.
A short scenario conversation can help establish whether property-secured business finance may fit.