There are many different types of mortgages in the finance and real estate market. However, one of the most popular types of mortgage loans is a blanket mortgage.

What does a blanket mortgage mean?
The idea behind a blanket mortgage is quite simple – get a single loan by putting up more than one piece of real estate as collateral.

Top reasons why blanket mortgages are popular
Blanket mortgages come with more than a fair share of surprising advantages that most people fail to see immediately. There are times when having real estate lying around can really help turn a bad situation into a good one.

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Here are the top three reasons why blanket mortgages are so popular.

• Better valuation: Value for money is hardly ever a concern in a blanket mortgage. The best thing is that having more than one collateral that is unequal in value can drive up the overall value of the total loan amount by simply lowering the interest rate of the loan.
• Minimized risks: The borrower has a slightly minimized risk of hitting rock bottom. If one of the properties is sold off, it does not force the entire mortgage to be retired. The borrower can simply let go of the portion of the money tied up in that piece of property.
• More capital: Having lesser interest rates may sound like a big saver at face value but it saves on more than one thing. Less interest means more free capital for the borrower and this is a great prospect for businesses looking to expand, as it saves money across the board.

Typical reasons to take out a blanket mortgage
Blanket mortgages are a great idea to get extra money and develop the landed property further. It can also be taken out to cover the expenses associated with purchase and development of a new piece of land. These type of mortgage is of particular interest to real estate dealers who invest in commercial and residential property. The blanket mortgage can easily finance a large project such as residential towers and multi-family housings. The biggest risk associated with this type of mortgage loan for the borrower is if they happen to default. Defaulting on even one of the mortgaged properties can trigger an ugly chain of events. It can lead to heavy penalties including the possession of all properties in the mortgage to settle the debt. So, one should take out a blanket mortgage only when they are absolutely certain that there is not going to be a default in the payment.

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