TRUSTCO
Serving Central Indiana - North Texas Market
Blanket / Bridge Loans
A "blanket loan" is a single mortgage that "covers," or is secured by, more than one parcel of property.
A "bridge loan" is essentially a short term loan taken out by a borrower against their current property to finance the purchase of
a new property
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Blanket Loan
A Blanket loan, is a loan used to fund the purchase of more than one piece of real property.
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Blanket loans are popular with builders and developers who buy large tracts of land, then subdivide them to create many individual parcels to be gradually sold one at a time. Rather than securing a new mortgage each time a portion of the development is sold, the borrower uses the blanket loan to buy them all.
Once a parcel is sold, a portion of the mortgage is released, with the rest of the mortgage remaining intact. If you have 10 properties covered by a blanket loan and decide to sell two, you can do so without incurring penalties.
Bridge Loan
A Bridge loan is interim financing for an individual or business until permanent financing or the next stage of financing is obtained. The funds from the new financing is generally used to "take out" the bridge loan, as well as other capitalization needs.
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Bridge loans are typically more expensive than conventional financing, to compensate for the additional risk. Bridge loans typically have a higher interest rate, points , and other costs that are amortized over a shorter period, and various fees
and other costs. The lender also may require cross-collateral and a lower loan-to-value ratio.
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