What's the difference?
When you're in a tight spot and need cash fast, the terms "caveat loan" and "bridging loan" often get thrown around interchangeably. But they're not the same thing, and picking the right one could save you thousands of dollars.
A caveat loan is a short-term loan secured by the equity in your property. You borrow money against the property itself. It settles quickly — often in 24 hours — because there's no sale involved. You just need a property with enough equity, a lender who trusts the deal, and you're done. You repay the loan within weeks or months.
A bridging loan is also secured by property, but it's designed to bridge a gap between two property transactions. The classic scenario: you're buying a new house before your current house has sold. The bridging loan lets you complete the purchase of the new property while you're waiting for the sale of the old one to complete. Once the old property sells, you use those proceeds to repay the bridging loan.
The key difference is purpose and timing. A caveat loan is about getting quick cash for any reason. A bridging loan is specifically about managing the overlap between buying and selling property.
When a caveat loan is the better option
A caveat loan makes sense if you need to:
- Act fast. You need the money in days or even hours. A caveat loan can settle in 24 hours; a bridging loan typically takes 1-5 business days at minimum.
- Keep it short. You'll repay the loan within weeks or a few months. Caveat loans are designed for 1-36 months, with terms up to 3 years. If your need is measured in days or weeks, a caveat loan is simpler and cheaper.
- Borrow smaller amounts. You need $50,000 to $5 million. Caveat lenders typically lend between $50K and $30M, but many deals sit in the lower range. If you need a smaller amount urgently, a caveat loan is often your fastest option.
- Avoid complex legal work. A caveat loan doesn't require a property sale to complete. No sale means no chain of contracts, no bridge transactions, no waiting for other people's lawyers. Just your property and the lender's security.
When bridging finance makes more sense
A bridging loan is the better fit if you need to:
- Buy before you sell. You've found the property you want to move into, but your current property hasn't sold yet. Bridging finance lets you complete the purchase now and repay from the sale proceeds later.
- Hold the loan longer. You're comfortable with terms of 6 months, 12 months, or even 24+ months. Bridging loans suit longer holds because the repayment is tied to a known event — the sale of your existing property.
- Borrow larger amounts. You need $500,000 to $80 million. Bridging lenders often structure larger deals, especially where multiple properties are involved. The loan sizes and complexity are typically bigger.
- Get better rates. Bridging loans can have lower interest rates than caveat loans — starting from 4.99% p.a. versus 7.03% p.a. — because the repayment is tied to a concrete event (the sale). The lower rate can offset setup costs if you're holding the loan for 6+ months.
Not sure which fits your situation?
Describe what you're trying to achieve and we'll recommend the right product.
Check Your OptionsComparison: caveat vs bridging
| Feature | Caveat Loan | Bridging Loan |
|---|---|---|
| Speed | 24 hours to 5 days | 1–5 business days (longer if property sale is complex) |
| Typical term | 1–36 months | 1–30+ years (usually matched to sale timeline) |
| Typical amount | $50K–$30M | $50K–$80M |
| LVR (residential) | Up to 90% | Up to 95% |
| Interest rates | From 7.03% p.a. | From 4.99% p.a. |
| Setup costs | Lower (simpler deal) | Higher (involves property sales) |
| Best for | Urgent cash, short-term gaps, contract deposits, small amounts | Buy–sell cycles, longer holds, larger amounts, property development |
| No sale required | Correct | Incorrect (designed around property sale) |
Two real-world examples
Illustrative example — not a real caseScenario 1: The contractor who needs $200K in 24 hours
A business owner has just won a major contract. To get started, he needs to put down a $200,000 contract deposit by tomorrow morning. He owns a house worth $600,000 with a $300,000 mortgage, so he has $300,000 in equity. A bank would take weeks to process a loan. A caveat lender can settle the $200,000 loan in 24 hours. He's only borrowing 33% of the property value, so the LVR is safe. He repays the caveat loan in 6 weeks once the contract cash starts flowing. A caveat loan is the obvious choice here.
Scenario 2: The homebuyer who found their dream house before selling
A couple have decided to sell their current home (worth $800,000) and buy a new one (listed at $750,000). The new property completes in 6 weeks, but they expect their old house to take 8-10 weeks to sell. Bridging finance lets them complete the new purchase now and repay from the sale proceeds once the old house sells. The loan will probably run for 8-10 weeks (maybe up to 6 months if the sale drags). A bridging loan is purpose-built for this scenario. The interest rate is lower than a caveat loan, and the lender understands the repayment timeline — it's tied to the sale of the existing property.
| Aspect | Caveat Loan | Bridging Loan |
|---|---|---|
| Application process | Quick (no sale contract needed) | More detailed (sale timeline, buyer details) |
| Documentation | Simpler (property valuation, proof of identity) | Extensive (sale contract, proof of funds, legal docs) |
| Exit strategy | Flexible (repay from any source — business, sale, savings) | Fixed (tied to sale of existing property) |
| Cost if delayed | Higher interest continues to accrue on your chosen term | Extends beyond the planned sale date = extra interest and costs |
| Typical borrower | Businesses, contractors, investors, property buyers | Homebuyers, developers, investors completing a sale |
How to know which one to choose
Ask yourself these three questions:
- How soon do you need the money? If it's in days, caveat is faster. If it's tied to a property sale, bridging is designed for that.
- How long will you hold the loan? Caveat loans are for 1-36 months. Bridging is for longer holds (6 months to 2+ years) tied to a sale timeline.
- What will repay the loan? If it's business income, a contract or savings, caveat works. If it's the sale of your existing property, bridging is the right fit.
We have specialist caveat lenders and bridging finance providers on our panel. Once you describe your situation, our AI will recommend which product suits your deal and show you which lenders are willing to fund it.
- Caveat loans: Settlement in 24 hours, terms 1–36 months, rates from 7.03% p.a., up to 90% LVR residential
- Bridging loans: Settlement 1–5 business days, terms up to 24 months, rates from 4.99% p.a., up to 95% LVR residential
- Both products available across all Australian states and territories
Tell us your timeline and what you're trying to achieve, and we'll match you with the right lender for your situation.
How to get matched to the right product
The process is simple:
- Step 1: Describe your situation. Tell us what property you own, what it's worth, how much you need, and what you're trying to do (urgent cash, buy–sell cycle, etc.). You don't need all the details — just the basics.
- Step 2: Get a product recommendation. Our AI assesses your timeline and scenario, recommends caveat or bridging (or both), and shows you lenders on our panel who can help with each option.
- Step 3: Choose and connect. Review the options, pick the product and lender that fit, and connect directly for an indication and next steps.