Understanding Blanket Real Estate Mortgages

A blanket real estate mortgage is a higher security mortgage with better possibilities of interest rate and loan term negotiations. In layman’s terms, this type of mortgage allows the borrower to put more than one property in a single mortgage scheme.

Advantages of a blanket mortgage

On the plus side, the lender has more security because more properties are being pledges. This makes for a higher level of security for the lender.

Because the lender is more secure about the loan and the borrower’s capability to meet his/her obligations, the borrower can, then, negotiate for lower interest rates in the blanket mortgage, or sometimes longer terms with lower monthly payments.

Disadvantages of a blanket mortgage

The only upfront disadvantage for the borrower in a blanket real estate mortgage is the greater risk involved. In any event that the borrower fails to meet his obligations, all properties within the blanket mortgages will be foreclosed.

Separation from the blanket mortgage can also be a problem if and when the borrower decides to sell one of the properties within the blanket mortgage. The borrower might have to pay huge penalty fees because s/he is unable to keep to the mortgages terms and conditions.