What is a Blanket Loan?
Blanket Mortgages 101
Blanket mortgages may be a new concept for many residential real estate investors. However, they have been used for decades by builders and developers, and commercial property investors.
Blanket mortgages are used for funding more than one piece of property, in one loan, with a single servicer. Imagine if a builder or developer needed to arrange individual lot and home financing for every property in a new subdivision, or condominium building. It would be a paperwork nightmare, not to mention slow, inefficient, and extremely expensive.
How Blanket Mortgages Work
A blanket loan is a single mortgage that covers multiple properties. Instead of having individual loans for each investment property, you consolidate everything under one umbrella loan.
Key features include:
- One Monthly Payment: Instead of managing multiple mortgage payments, you make one payment for all properties
- Release Clause: Most blanket loans include a release clause that allows you to sell individual properties without paying off the entire loan
- Cross-Collateralization: All properties in the portfolio serve as collateral for the loan
Benefits for Rental Property Investors
For rental property investors, blanket loans offer several advantages:
- Efficiency: Streamline your portfolio management with one loan and one lender
- Cost Savings: Reduce closing costs and fees compared to individual loans
- Flexibility: Easier to add or remove properties from the portfolio
- Better Terms: Larger loan amounts may qualify for better interest rates
- Simplified Accounting: One loan makes bookkeeping and tax preparation easier
When to Use a Blanket Loan
Consider a blanket mortgage when you:
- Own or are acquiring multiple investment properties
- Want to refinance your existing portfolio
- Are purchasing a package of properties
- Need to consolidate existing loans for better management
Due-on-Sale Considerations
One important consideration with blanket loans is the due-on-sale clause. This clause typically requires the loan to be paid in full if any property is sold. However, most blanket mortgage lenders include a release clause that allows individual properties to be sold without triggering the due-on-sale provision for the entire loan.
Get Started with Blanket Loans
At Rental Home Financing, we specialize in blanket loans for rental property investors. Our investor-friendly lending programs are designed to help you grow and manage your portfolio efficiently.
Apply Online Now or contact us to learn more about our blanket mortgage programs.