Our ServicesBlanket Loans - Vanta Commercial Lending
What is a Blanket Mortgage
A blanket mortgage is a form of mortgage which covers more than one property. Real estate is used as collateral for a mortgage, but individual pieces of real estate may be sold without the whole mortgage needing to be retired.
Breaking Down Blanket Mortgages
Blanket mortgages are used as an alternative to taking out multiple individual loans. Property developers often do this if they are making a large property purchase and they intend to then sell individual parts of the larger set of properties. Blanket mortgages can cover the cost of purchasing a large area of land, which is then divided into lots for sale or rental.
How Blanket Mortgages Are Used
Blanket mortgages are useful for property investors that own and manage several properties. They allow the developers to have access to more cash on hand, and the blanket mortgage may offer better interest rates than individual mortgages would, as well as offering more convenient and more favorable terms.
If the developer is able to enjoy smaller monthly payments then this could offer more resources to purchase more properties. The owner of the property saves time and money compared to having to apply for, and close on, several mortgages. They have only one set of fees to pay for too.
House flippers often use blanket mortgages to allow themselves to act more quickly on opportunities when they arise. They can acquire multiple properties under one mortgage, refurbish them and then resell them without having to deal with closing mortgages on the properties that they sell. Blanket mortgages usually have more favorable clauses to resell properties compared to having individual mortgages for each and every property that the flipper is dealing with. Since the flipper does not need to refinance the loan each time, they are able to work far more quickly.
Businesses often choose a blanket mortgage if they operate out of several locations. Landlords may use them to manage multiple properties and large companies might have several offices in a blanket mortgage. There is a risk to this, however. If the owner defaults on a blanket mortgage then they could end up faced with the threat of repossession of all of the properties that are covered by the mortgage instead of just the one property that the defaulted payments relate to. There are some benefits to having loans separately and even with different lenders so that your liability is far better controlled should things ever go wrong.