A blanket mortgage is a type of loan used to fund the purchase of more than one piece of property. 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 builder or developer 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.

A blanket mortgage contains a “release clause” which allows the sale of portions of the secured properties and corresponding partials to be repayment of the loan. By doing this it allows purchases and sales of multiple units of property with the convenience of having only one mortgage. The remaining outstanding balance is adjusted according to what has been sold and what is still outstanding, until all properties are sold and then the entire mortgage is repaid.