What Is an Acceleration Clause?

Definition. An accelerated clause is a term in a loan agreement that requires the borrower to pay off the loan immediately under certain conditions.

What is an example of an acceleration clause?

For example, assume a borrower with a five year mortgage loan fails to make a payment in the third year. The terms of the loan include an acceleration clause which states the borrower must repay the remaining balance if one payment is missed.

What is an acceleration clause when buying a house?

An acceleration clause is a condition inside a contract that allows a lender to “accelerate” the repayment of your loan if certain conditions aren't met. The acceleration clause will outline the different situations a lender can demand loan repayment and how much repayment is required.