Blanket mortgages can be beneficial for property owners who have more than one property and are looking to refinance and free up some more cash. Investors utilizing this kind of loan agreement may be able to take advantage of more affordable rates or negotiate better terms than if they held separate loans for each property. A blanket montage may lower monthly payments if an appropriate deal is struck, affording a property owner additional funds to invest in more properties.
These loans can be useful for investors looking to cut some of the costs involved in attaining and closing on more than one mortgage. Blanket mortgages allow property owners to avoid paying fees on each individual property.
Blanket Mortgages and House Flipping
Blanket mortgages are also great options for those in the house-flipping business. Utilizing a blanket montage can help an investor operate more efficiently when attempting to flip multiple properties. If an investor finds more than one property that they would like purchase, renovate, and try to sell, using a blanket mortgage may afford him or her an easier path to achieve those goals. The terms of a blanket mortgage can make it possible to resell each property separately, and it may also be possible to sell each property separately without having to refinance the loan.
Blanket Mortgages for Businesses
Many companies with multiple sites use blanket mortgages to finance properties. A great example would be a restaurant chain. The owner of the restaurant chain would be able to sell locations that are underperforming without jeopardizing the whole mortgage. Developers looking to invest in multifamily houses, apartment complexes, or commercial property can also benefit from the flexibility of a blanket mortgage.
It’s important for investors financing with a blanket mortgage to stay on top of payments for all their properties, because defaulting on a single property could cause all of the properties financed by the mortgage to be seized by the lender. The specialized nature of blanket mortgages makes them more difficult to secure for many investors, because most traditional lenders do not jump at the opportunity to take on complex financing arrangements and will put borrowers through a rigorous vetting process to qualify them for a blanket mortgage. Prospective borrowers should try to source lenders that are familiar with blanket mortgage arrangements for a more seamless process.
