Property Gear-Up or Cash-Out Loans are similar to refinancing, but with one key difference: instead of just refinancing the outstanding loan amount, you borrow based on the current market value of your property or land — unlocking equity built up over time.
Let’s say Daniel initially borrowed $700,000 on a property worth $1 million. Years later, he has only $300,000 outstanding. Interest rates have since dropped, and by refinancing with another bank at a lower rate (e.g. 1% instead of 2%), he can enjoy reduced monthly instalments.
However, if Daniel chooses to gear up or cash out, he could borrow the full $700,000 again, using part of it to pay off the existing $300,000 and gaining $400,000 in cash — which could be used to fund a business or invest in another property. If the property’s valuation has increased or a lender now offers a better Loan-To-Valuation (LTV) ratio, he may be able to borrow even more.
This form of financing is also referred to as: property equity loan, mortgage withdrawal, reverse mortgage (in some countries), home equity loan, cash-out refinancing, equity release loan, second mortgage / 2nd charge loan.
If interest rates have risen, Daniel may not want to refinance the full amount. Instead, he could continue servicing the existing $300,000 loan at the lower rate and take a new $400,000 loan from another lender — a second charge or caveat loan.
In this case, the second lender places a lien, charge, or caveat on the property. A caveat acts as a legal warning to others that the lender has a financial interest in the property.
Note: In Singapore, HDB properties cannot be used for second liens at the time of writing.
Caveats vs Liens vs Charges
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Caveat: Notifies others of the lender’s interest; may block transfers/sales without consent
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Lien: Gives the lender a right to seize property if the borrower defaults
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Charge: A form of lien that typically requires legal proceedings before repossession
Sometimes a lender may only file a caveat, even after the previous lender is paid off, for cost efficiency.
If the property is owned by a company, apply under the Business category. If it’s owned by an individual shareholder, they typically take the loan personally and inject the funds into the business.
Learn more:
When are shareholders' NOAs required for a business loan?
Some lenders only lend to companies, prompting a few HNW individuals to set up entities solely to qualify. Our Community Partners — including accounting firms — can assist with incorporation.
These lenders typically serve High Net Worth (HNW) individuals with $2M+ in assets. But before setting up a company just for this, try getting quotes from Consumer lenders — the assessment is similar, and setting up a company may not save you money.
In some cases, yes — industrial equipment or machinery with high resale value and liquidity can also be geared up, especially if the lender can easily dispose of the asset in the secondary market.
The same type of loan may be referred to as: second mortgage, lien-based loan, cash-out refi, leveraged loan, property equity loan, and more.
Even relationship managers switching banks have gotten confused by the naming.
If you're unsure what you're discussing matches what a lender means, share our glossary page with them.
With FindTheLoan.com you don’t need to worry about these naming differences. We help you compare offers from multiple lenders using one submission — without needing to chase down banks one by one.
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