Showing posts with label Due on sale clause. Show all posts
Showing posts with label Due on sale clause. Show all posts

Thursday, April 27, 2023

What would trigger a lender to require the entire principle of the loan due?

A due-on-sale clause is a provision commonly included in a mortgage contract that requires the borrower to repay the outstanding balance of the mortgage loan in full if the property securing the loan is sold or transferred to a new owner. The clause is intended to protect the lender's interest in the property by ensuring that the original borrower cannot transfer the mortgage to a new owner without the lender's approval or without paying off the loan. Due-on-sale clauses are common in mortgages, and failure to comply with the clause could result in the acceleration of the loan, meaning the entire outstanding balance becomes due and payable immediately.

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