Other suitable properties are owned: First, the buyer must own other real estate that is available as security for a blanket real estate mortgage.
Advantages in loan terms: Blanket mortgages help buyers to negotiate better terms and interest rates due to the extra security for the loan.
Income will service the debt: In commercial transactions, where these loans are frequently used, there should be enough income generated by the properties to cover the mortgage payments. Though deals can be done with negative cash flow, this usually negates the advantages in terms.
No separation of the properties: The buyer should be reasonably certain that there will be no need to liquidate one of the properties in the near future. This could result in refinance requirements and other negative consequences.
If a buyer wants to use two apartment properties to secure one mortgage, a blanket mortgage could be a good decision if the four criteria are met. When the lender is enticed to offer a lower interest rate, and the properties' cash flow exceeds mortgage and management costs, a blanket mortgage might be the perfect choice.
