Gain access to additional equity.Ĭombining all the equity across your portfolio into one blanket mortgage could allow you to buy more real estate or improve existing properties by maximizing the amount you receive in a cash-out refinance. Multiple properties can also be used to negotiate better terms and interest rates, thus lowering your monthly payment and increasing your net cash flow while raising the properties’ value. A blanket loan solves this barrier to growth. It is not uncommon for real estate investors to come up against the issue of only being allowed so many individual commercial mortgages. The simplest reason why you might choose a blanket loan is to consolidate multiple commercial loans from different lenders under one financing arrangement. Refinance to consolidate multiple commercial loans. This is called a “partial release clause.”Ī partial release clause allows the lender to release one of the properties from the mortgage as you pay down the mortgage or when you sell the property. If you were to pay back the portion of the loan that each sold property represents, you wouldn’t have to refinance the entire loan. Once you have a blanket mortgage, there’s the potential to sell one or more of your real estate investments with only minor adjustments to your existing blanket mortgage. This saves time and money when compared to initiating and managing separate loans, where you would have to repeatedly submit credit information, proof of employment, and asset verification and be more involved in each transaction. Simplified mortgage paperwork and some cost savings.Ī blanket loan allows you to apply for and secure multiple commercial mortgages at once, with only one credit approval. Moreover, since there is often no limit to the number of properties you can have under a blanket mortgage, you can also use the clout gained from the larger loan to access additional equity, negotiate better loan terms, or simply lower monthly payments. When you own more than one investment property, there are benefits to utilizing a blanket loan, starting with a simplified process that frees up time and money, and goes on to potentially help you expand your real estate empire. Typically, there is no limit to the number of properties you can mortgage under a blanket loan. It allows you to buy, hold, sell, or replace various properties under one mortgage without triggering a due-on-sale clause. What is a Blanket Mortgage?Ī blanket mortgage allows you to get a loan from one lender with one set of terms and make one payment for all your real estate. Though the benefits or “pros” of a blanket mortgage may seem obvious, there are also few “cons.” Keep reading to learn the details of a blanket loan and if it sounds like an option for you. If this sounds familiar, a viable option may be to obtain a blanket mortgage, where all your properties are under one loan agreement with one lending company. If you’re a commercial real estate (CRE) investor with more than one property, then you know juggling multiple mortgages with different interest rates and loan terms can sometimes be a chore and tie up your liquidity.
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