What is an acceleration clause?
- Definition of Acceleration Clause
An acceleration clause is a statement within a mortgage contract that stipulates whether or not a lender is allowed to demand full or partial payment of an outstanding mortgage loan from the borrower. The clause should stipulate the reasons a lender can exercise an acceleration clause within a mortgage contract.
Why is this term important?
A lender may decide that certain risks are important to include as a provision of loaning the money. This clause allows a lender to formally and legally require the borrower to comply with those provisions.
Examples of term
For instance, if the contract stipulates that the borrower cannot rent out any portion of the property and the borrower still rents out the basement, the lender can require full or partial payment of the mortgage loan as the borrower is in breach of contract.