Definition
An acceleration clause lets your lender demand full repayment if you miss payments or violate loan terms. It's how they protect themselves when borrowers stop paying. Three missed payments often trigger it—suddenly you owe the entire balance, not just monthly payments.
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Acceleration clauses are standard in mortgages and protect lenders by allowing them to call the entire remaining balance due if borrowers breach loan terms. Default (missing payments) is the most common trigger, but other triggers include: property sale, damage to the property, bankruptcy, or failure to maintain required insurance. When a lender accelerates, the borrower must pay the full remaining balance or face foreclosure. Acceleration clauses exist in virtually all mortgages and are essential to lender enforcement rights.
Pro Tip
Understand your mortgage's acceleration terms; missing payments doesn't just damage credit, it can trigger acceleration and foreclosure.
Example
Your mortgage has an acceleration clause stating that three missed payments trigger acceleration. After missing three months, the lender demands the remaining $250,000 balance immediately.