What does the term "acceleration" refer to in mortgages?

The term "acceleration" in mortgages specifically refers to the lender's right to demand the full repayment of the loan amount if the borrower defaults on their payments. This provision is an important protective measure for lenders, allowing them to recoup the total balance of the loan rather than waiting for payments to continue over time.

When a loan is accelerated, the outstanding balance becomes due immediately because the default signifies a breach of the mortgage agreement. This could occur due to missed payments, bankruptcy, or other breaches of contractual obligations. As a result, the acceleration clause empowers the lender to take swift action to recover funds, safeguarding their financial interests.

Other terms, such as paying off a loan early, adjusting interest rates, or transferring the mortgage to another party, do not align with the definition of acceleration. Each of those concepts has its own specific implications in the context of mortgage agreements but does not refer to the lender’s right to demand full repayment in the event of a default.