For those who are unfamiliar with the term “caveat loan”, it is a loan that is secured by the borrower’s equity in their home. This is an ideal way to provide the necessary security for a business start up loan, for example, and by utilising the equity in your home that would otherwise be sitting dormant, funding is much easier. There are, of course, many loan providers that offer such a service, and with that in mind, here are a few useful tips on sourcing the best deal when looking for a caveat loan.
- Low Interest Rates – With a little Internet searching, you should be able to compare interest rates, and with some online loan providers offering rates as low as 1.8% per month, the repayments will not be a burden. When sourcing a caveat loan, there are many things to consider, and a reputable lender would be happy to discuss a range of packages to suit your needs.
- Flexible Terms – Some loan providers will allow up to 36 months for repayments, which certainly helps by keeping the monthly figure manageable, and in most cases, you can add without penalty, and with early settlement options, you can clear up the debt if things go better than expected.
- Rapid Response – Arranging a loan for any purpose shouldn’t be measured in terms of weeks, and with online providers, you can receive pre-approval within 5 minutes and the funds would be in your account within a day or two. Many new businesses suddenly experience cash flow problems, and haven’t the time for the traditional application consideration process to run its course, and some lenders appreciate this and strive to make the process fast.
- Loan Consolidation – You may already have a loan or two in progress and by consolidating them with your caveat loan, you will save money on interest, and instead of several monthly payments, you have a single monthly figure. This is a smart way to utilise the equity in your property, and the interest rates would be lower than an unsecured loan, saving you in the long run.
- Borrow 100% of the Property Value – In many cases, you can borrow the full value of the property, even though you are still paying the mortgage. Starting a new business, for example, can be very unpredictable, and by borrowing more than you think you need, you are covered for any unseen circumstances that might arise.
Unsecured loans are generally more expensive, and by using the equity in your home as collateral, it is possible to borrow at reasonable interest rates, and with a repayment package that is tailored to the borrower, the repayments will not be too much of a burden. Many people are unaware of the benefits a caveat loan offers, and if you are about to launch a new business or would like to extend your property, using your equity is an affordable way to secure the funding.