What is the primary purpose of an acceleration clause in a mortgage?

The primary purpose of an acceleration clause in a mortgage is to allow immediate payment of the loan. This clause serves as a protective measure for the lender, enabling them to demand the full outstanding balance of the loan if certain conditions are not met by the borrower, such as a default in payments. In essence, if the borrower fails to adhere to the agreed-upon terms of the mortgage, the acceleration clause empowers the lender to accelerate the payment schedule, thereby requiring the borrower to pay off the loan immediately rather than continuing with the regular installment plan.

This mechanism is crucial for lenders as it helps them mitigate potential risks associated with borrower defaults. It can also serve as a strong incentive for borrowers to maintain their payment schedules, knowing that a default could lead to the entire loan amount becoming due at once.