A Blanket Mortgage (also called a blanket loan) is a type of home loan used to fund the purchase of more than one piece of property. Blanket loans are popular with builders and developers who buy large pieces of land to subdivide and build (and then sell) multiple homes. However, they’re also very popular with real estate investors because it permits them to secure multiple properties at one time with the convenience of only one loan payment.
These loans are much more popular on the commercial side, but are available to the seasoned investor as well, permitting them to buy more than one property at a time. Investors usually set up an LLC for this type of purchase, for the added protection that an LLC offers.
While traditional mortgages usually include a “due-on-sale” clause stating that once the property is sold, the outstanding mortgage debt must be paid in full, a blanket mortgage permits a “release clause,” allowing investors to sell a portion of the loan (for example, one property) and only partially repay the loan at that time.
