Acceleration Clauses Defined

Acceleration clauses are conditions declared by the lender that warrants him or her to demand the remaining value of a home loan immediately.  

The Clauses

One type of acceleration clause states that a lender must be notified before a borrower can sell the piece of property that he or she has taken money out to finance. The lender wants to make sure that the borower does not intend on suddenly severing business ties.

Another clause requires that the borrower remain in possession of certain pieces of collateral throughout the term of the loan. This is to ensure that the loan remains secure and that the lender will not lose out completely if default occurs.

An acceleration clause may include the details of the required payments for the loan. The clause will state what will happen if a borrower misses or is late on a payment. Sometimes, the acceleration clause will state that if a borrower misses a payment, he or she will immediately be required to pay to remaining portion of the loan.