A caveat is a caveat-able interest in property lodged at LINZ to protect an unregistered interest in the property.
When a lender refers to a caveat they refer to an ‘agreement to mortgage’ entered into by a guarantor. This in itself is not a piece of security but the right for the lender to oblige the guarantor to enter into an agreement (ie the mortgage).
When the caveat is registered with LINZ it will prevent the property being sold or a mortgage being taken over the property without the lender’s consent.