Do you allow partial release clauses?

Do Blanket Loans Include a Partial Release Clause?

Blanket loans from Rental Home Financing are designed primarily for buy-and-hold investors, so full partial release provisions are not a standard feature of our loan programs. However, we do allow a 25% principal reduction to the original loan balance during the loan term. This gives you limited flexibility to release properties without triggering a full payoff requirement.

The 25% provision strikes a balance between borrower flexibility and loan integrity

How Does the 25% Principal Reduction Work?

The one-time 25% provision means you can release individual properties from the portfolio by making a 25% principal reduction to the original loan balance. Here is what that looks like in practice:

• Selling properties -- proceeds from the sale of released properties are applied to the loan balance, reducing your outstanding principal
• Substituting properties -- you can replace a released property with a comparable or higher-value rental asset, subject to lender approval
• One-time use -- this provision can be exercised once during the loan term, so plan strategically
• DSCR maintenance -- after any release, the remaining portfolio must continue to meet minimum debt service coverage ratio requirements

Why Are Full Partial Release Clauses Not Standard?

Blanket mortgages pool multiple properties as cross-collateralized security for a single loan. The loan amount, rate, and terms are based on the entire portfolio's value and income. Releasing individual properties piecemeal can erode the loan-to-value ratio and cash flow metrics that the loan was originally underwritten against. The 25% principal reduction requirement strikes a balance between borrower flexibility and loan integrity.

If your investment strategy involves regularly buying and selling individual properties, a blanket loan may not be the ideal structure. Investors focused on long-term portfolio growth and stable cash flow benefit most from this product. For more active trading strategies, individual property loans or bridge financing may be more appropriate.

Learn more about how our blanket loan programs are structured for long-term portfolio investors.