What is a blanket loan?

A blanket loan is a financing instrument that encompasses more than one piece of property under a single mortgage agreement. This type of loan is particularly beneficial for real estate developers or investors who wish to finance multiple properties simultaneously. It allows for easier management of loans as it combines various real estate assets, effectively streamlining the borrowing process and often providing more favorable terms than if each property were financed separately.

Such loans are commonly used in scenarios involving residential housing developments, where multiple lots or units are being developed. By covering multiple properties, a blanket loan can facilitate more straightforward transactions if the borrower wishes to sell individual properties in the future, as the loan can usually be partially released for each property sold.

The other options, while mentioning different types of loans or scenarios, do not accurately capture the broad nature of a blanket loan. For instance, limiting it to single residential units or to refinancing does not reflect its multi-property coverage. Furthermore, categorizing it as a personal installment loan mischaracterizes its function and usage in real estate financing.