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A caveat loan is often chosen precisely because it does not need the first mortgagee to sign anything. That is different from saying the bank will never know, and the distinction is worth understanding before relying on it.
What is public and what is not
The title register is public. Anyone who pays for a title search sees the caveat, the name of the caveator and the date it was lodged. What they do not see is the loan amount, the rate or the purpose. So the fact of a caveat is visible; the detail is not.
When banks actually look
Banks do not monitor every title continuously. A title search is triggered by events: a refinance or top-up application, a request to vary the loan, a periodic review on a commercial facility, a sale, or arrears. If none of those happens during a three-month caveat loan, and the caveat is withdrawn on repayment, the bank may never search the title while it is there. Some lenders do subscribe to title alert services on commercial portfolios, so it cannot be assumed.
The registry itself writes to the registered owner when a caveat is lodged, as a fraud safeguard. Writing to existing mortgagees is not standard practice in most states.
What your mortgage says
Most bank mortgages and commercial facility agreements contain a clause that the borrower will not grant further security over the property without the bank’s written consent. A caveat supported by a charge is further security, so lodging one without consent can be a technical breach. What a bank does about that is a separate question, covered in can my bank call in my mortgage because of a caveat.
The practical position
For a short, clearly temporary loan that is repaid on time, with the bank loan kept up to date throughout, a caveat rarely becomes an issue with the first mortgagee. Where the funding will run longer, where a commercial facility has annual reviews, or where you would rather not rely on silence, a registered second mortgage with the bank’s consent and a deed of priority is the cleaner structure, and it prices lower. See can you lend behind a bank.
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Get matched with a funderFAQ
Is lodging a caveat a breach of my bank mortgage?
It can be. Most bank mortgages say the borrower will not create another security interest over the property without consent. In practice banks rarely act on a short-term caveat where their own loan is being paid on time, but the clause exists and should be read.
Does the land registry tell the bank?
Registries notify the registered owner when a caveat is lodged. Notification of existing mortgagees is not standard practice in most states, though anyone can set up a title alert.
Will a caveat affect my credit file?
No. A caveat is recorded on the property title, not on a credit report. The loan behind it may appear on a commercial credit file depending on the lender.