Due-on-sale clause

Part of a loan agreement that gives a lender the right to demand repayment of a loan when the property is sold

Lenders include a due-on-sale clause in a mortgage to prevent buyers from taking over a seller's existing mortgage. Lenders don't benefit when this happens because the existing mortgage usually has a lower interest rate than current market rates. A due-on-sale clause is a type of acceleration clause.

See: Acceleration clause, Assumable mortgage