If developers, real estate investors, and flippers want to finance the purchase of multiple properties then a blanket mortgage is a great alternative that can be used.
Blanket mortgages are also termed sometimes blanket loans, they are taken out to finance purchasing and developing land that borrowers plan to subdivide into individual lots.
Many times borrowers acquire properties within a large purchase that they intend to sell in individual parts.
For instance, blanket mortgages may be sought by flippers as a way to act quickly and take advantage of opportunities they see in the market.
A blanket mortgage could offer more leeway if an investor identifies multiple properties they want to acquire, refurbish, and put back on the market, by making such actions more possible.
As new buyers come forward individually the clauses of such a mortgage may make it feasible to resell the properties.
When separate properties are sold depending on the terms of the blanket mortgage, it may or may not be necessary to refinance the loan.
Blanket mortgages are also sought by businesses with multiple locations they wish to own and operate out of.
Like real estate developers who invest in commercial or residential property, like apartment buildings or multifamily homes.
Most blanket mortgages come with a release clause which frees up the borrower from the portion of the loan which is already been paid for.
So when the borrower sells a piece of property that is covered under the loan, the funds can be used to purchase another property.
Developers who develop land and build and sell new homes commonly use blanket mortgages.
Once the homes are sold off, the developers can use the money to purchase new plots of land instead of paying down the loan.