Caveat loan costs: what you'll actually pay, in dollars

Speed has a price, and the fair way to judge that price is in dollars. The question isn’t “what’s the rate?” — it’s “how many dollars will this loan cost me for the time I’ll actually have it, and will my exit cover them?” That’s the lens this page uses.

What costs appear on a caveat loan quote?

Group them into three buckets.

Bucket	Typical items	When you pay
Set-up	Establishment or application fee; valuation or property report; lender’s legal and documentation costs; registry lodgement of the caveat; title and other searches	At settlement, usually deducted from the advance
Running	Interest; any monthly account or line fee	Often prepaid for the term or capitalised into the balance
Exit	Caveat withdrawal lodgement; discharge or payout fee; minimum-term or early-exit charges	When you repay

Plus two you hope never to see: extension fees if you need more time, and default charges and enforcement costs if the loan isn’t repaid when due.

Why does prepaid or capitalised interest matter so much?

Most caveat loans don’t ask for monthly repayments. Instead the interest is either:

• prepaid — taken out of the advance at the start, so the cash in your account is smaller than the loan; or
• capitalised — added to the balance, so the amount you repay at the end is larger than the loan.

Both are sensible on a short loan, because you aren’t scrambling for monthly payments while you wait for the exit. But both change your arithmetic. If you need $150,000 in hand to pay a supplier, and the interest is prepaid, the loan itself has to be larger than $150,000. Tell us the amount you need in your account, and we’ll size the facility around it.

How do you add it all up? An illustrative example

Illustrative figures only — not a quote and not a typical price. Use your own quote’s numbers.

A Newcastle manufacturer needs $200,000 in hand to buy materials for a large order. It expects the customer’s payment in about four months.

Line	Illustrative amount
Cash needed in hand	$200,000
Set-up costs on the quote (fees, valuation, legal, registry)	$6,500
Interest and fees for four months, prepaid	$15,000
Loan amount (cash + prepaid costs)	$221,500
Exit costs on repayment (withdrawal, payout)	$700
Total cost of finance	$22,200
Amount the exit must cover	$222,200

Two questions follow straight from the table. Is a $22,200 cost worth it to land the order? And will the customer payment reliably cover $222,200 — with room left if the payment runs a few weeks late? If the answer to both is yes, the loan is doing its job.

The Caveat Loan Feasibility Checker lets you enter your own estimated total cost of finance and shows what your exit needs to cover. Or ask for a quote with every line itemised.

What makes one caveat loan cost more than another?

Pricing is individual, but the drivers are predictable:

• Combined LVR after the loan. More equity left over usually means a lower cost. See how much you can borrow.
• The property. Well-located residential property is simpler to value and sell than a specialised or regional commercial asset.
• The exit. A signed sale contract or bank approval is worth more than a hope.
• The term. Short and certain beats open-ended.
• The file. Clear ID, owners who are ready to sign and straightforward ownership structures take less work.

Which costs catch people out?

1. Minimum terms. Repaying after three weeks may still cost a month or more of interest.
2. Extensions. A sale that settles six weeks late can add a fresh fee plus more interest. Build a buffer into the term from day one.
3. Your own lawyer. The lender’s legal costs are on the quote; your own advice (and a guarantor’s) is separate.
4. The bank. If your existing mortgage contract restricts other security, sorting that out may have its own cost. See borrowing with an existing mortgage.
5. Tax interest you’re trying to escape. If you’re borrowing to clear ATO debt, remember that ATO interest charges incurred from 1 July 2025 are no longer tax-deductible — part of the reason owners compare the two costs. More on the ATO debt page.

Is a caveat loan worth the cost?

It’s worth it when the dollars it costs are clearly smaller than the dollars it saves or earns: a discount captured, a settlement completed, penalties avoided, a contract won. It’s not worth it when it simply delays a problem the exit can’t solve. We’ll tell you which one it looks like.

What should you ask about any caveat loan quote?

Before comparing quotes, get the same answers from each:

1. What is the total dollar cost if I repay on the expected date?
2. What is the cost if I repay one month early or one month late?
3. Is interest prepaid, capitalised or paid monthly?
4. How much cash will I actually receive after costs are deducted?
5. What are the exit costs — payout, discharge and caveat withdrawal?
6. Is there a minimum term or minimum interest period?
7. What does an extension cost, and when must I ask for one?
8. What default charges apply, and when do they start?

Put the answers side by side. The cheapest-looking quote isn’t always the cheapest once the real term is applied.

Want a quote you can read line by line?

We price every caveat loan on your actual property, term and exit, and we show the total dollar cost so you can make a clear decision.

Asking is quick — about 60 seconds, no credit check, and your details don’t get passed around a list of funders. A specialist reviews your numbers and calls you. The closer your figures are to reality (especially how much you need in hand and when the exit lands), the more accurate the quote.

Get an itemised quote →