Real Estate - When Should You Use Blanket Mortgages?

A blanket mortgage is a loan facility that can be used by a homeowner or homebuyer to finance two or more real properties. The properties can be used as collateral, but each may be sold separately without necessarily retiring the entire loan. Below are some instances when you can use blanket mortgages.

You Want to Refinance

Multiple properties owned by an investor and are purchased at different times and terms can be grouped together for refinancing via a blanket mortgage. If the loan rates are low, payments for the properties may be less when aggregated and can allow the owner to free up more cash that can be used for other investments.

You Need Money for Property Development

If you are going to develop a property, the cost to buy and develop a raw land will exceed the amount that you can borrow from banks. But under the right conditions, you can include other properties in a blanket real estate mortgage to get more funds for a property development project.

You Want Better Loan Terms

The bank or lender has more protection if the borrower’s properties are included in a blanket mortgage. So, this type of mortgage can be used by property owners to bargain for better interest rates or other favorable loan terms. If the properties are being leased out by the owner, generating positive cash flow is more possible with lower loan payments.

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