Table of Contents

Blanket Mortgage: Meaning, Overview, Advantages and Disadvantages

By

澳洲幸运5开奖号码历史查询:Julia Kagan

Updated April 29, 2025

Reviewed by

Doretha Clemon

Fact checked by

Betsy Petrick

What Is a Blanket Mortgage?

A blanket mortgage is a single mortgage that covers two or more pieces of 澳洲幸运5开奖号码历史查询:real estate. The real estate is held togetherꦡ as collateral on the mortgage, but the individual pieces of real estate may be sold without retiring the entire mortgage.

Blanket mortgages ma🍸ke it easier to get financing for multiple properties rather than having to take out numerous mortgages.

Key Takeaways

A blanket mortgage is a single mortgage that covers two or more pieces of real estate.
The real estate is held together as collateral, but the individual properties may be sold without retiring the entire mortgage.
Blanket mortgages are commonly used by developers, real estate investors, and flippers.
A primary benefit to a blanket mortgage is that it allows the borrower to have more cash on hand—for example, a property owner can save on costs associated with applying for and closing on multiple mortgages.
Pitfalls to blanket mortgages include higher average costs than a traditional mortgage.

Who Are Blanket Mortgages For?

A blanket mortgage is a useful option for developers, real estate investors, and flippers. Blanket mortgages, which are also referred to as blanket loans, typicallꩲy cover the costs of purchasing and developing land that borrowers plan to subdivide into individual lots. In many cases, borrowers acquire properties within a🌳 large purchase they intend to sell in separate parts.

For example, flippers may seek blanket mortgages as a way to act quickly and take advantage of opportunities they see in the market. If the investor identifies multiple properties they want to acquire, refurbish, and put back on the market, a blanket mortgage could🔯 offer more🗹 leeway for such actions.

The clauses of such a mortgage allow re♌selling the properties as new buyers come forward individually. Depending on the terms of the blanket mortgage, it may or may not be necessary to refinance the loan when separate properties are sold.

Businesses with multiple locations also may seek blanket mortgages. This could apply to real estate developers who invest in 澳洲幸运5开奖号码历史查询:commercial or residential property, such as apartment buildings or 澳洲幸运5开奖号码历史查询:multifamily homes.

Important

Most blanket mortgages come with a 澳洲幸运5开奖号码历史查询:release clause, freeing the borrower from the portion of the loan that has been paid. So when the borrower sells a piece of property covered under the loan, they can use the funds to purchase another property. This is common for developers who develop land and build and sell new homes. Once the homes are soldཧ to the public, the developers can use the money to purchase new plots of land rather than pay down the loan.

Pros and Cons of a Blanket Mortgage

Pros

澳洲幸运5开奖号码历史查询:Save on closing costs
澳洲幸运5开奖号码历史查询:Better rates

Cons

澳洲幸运5开奖号码历史查询:Higher down payments
澳洲幸运5开奖号码历史查询:Balloon payments
澳洲幸运5开奖号码历史查询:Default impact

Pros Explained

Save on closing costs: A blanket mortgage allows the borrower to have more cash on hand by saving on various costs associated with applying for and closing on multiple mortgages. The property owner needs to pay one set of fees for the blanket mortgage rather than separate fees on each property.
Better rates: The aggregate blanket mortgage also may take advantage of better 澳洲幸运5开奖号码历史查询:interest rates or simply be negotiated to offer more favorable terms than having to pay separately negotiated loans. This could free up more capital if it reduces the size of monthly payments, which in turn could offer them more resources to purchase more property.

Cons Explained

Higher down payments: Some costs tend to be higher than a traditional mortgage. Since the loan amount may be higher—because of the number of properties involved—the lender may require a higher 澳洲幸运5开奖号码历史查询:down payment to secure financing.
Balloon payments: The terms of the loan also tend to be different from traditional mortgage loans. Lenders may require the borrower to make a 澳洲幸运5开奖号码历史查询:balloon payment. That is, they may have to pay off the entire loan within a certain period of time.
Default impact: If the owner defaults on one property, the impact may trigger a situation that allows the lender to seek control of the entire set of properties covered by the mortgage.

Who Should Use a Blanket Mortgage?

Real estate investors or𒁏 developers or anyone else buying multiple properties at once might consider a blanket mortgage. If you have a business with multiple properties, a blanket mortgage might also be worthwhile.

What Does it Mean to Flip a Property?

Buying a property, renovating it, then selling it at a profit is considered flipping a property. Developers might do this by targeting properties they can buy cheap because of damage. After making repairs, they will se🍸ll the property for more than the combined cost of what they spent on the property and its repairs.

What Is a Balloon Payment?

A single, large payment due at the end of a loan is considered a 澳洲幸运5开奖号码历史查询:balloon payment. As an example, a loan might have low payments for a specified period of time before the entire b🔥alance comes due at some predetermined date in the future. This kind of loan might make sense for a developer who plans to flip a house quickly and wan🍃ts to keep mortgage payments low while making repairs.

The Bottom Line

Blanket mortgages cover more than a single property, but individual properties can be sold without retiring the entire mortgage. Real estate developers and investors use blanket mortgages when buying multiple properties at t🍬he same time instead of seeking individual mortgages for each property. This can save on closing costs since there is only one mortgage. The trade🃏off is that blanket mortgages might require higher down payments or balloon payments.

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