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Demand Clause on Mortgage

Demand Clause on Mortgage

This is a discussion on Demand Clause on Mortgage within the Mortgage Know-How forums, part of the Mortgage and Loans Forum category; Demand Clause on Mortgage A demand clause is an option protecting and benefiting the lender. It can be used to ...

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Mortgage Know-How A mortgage is the transfer of an interest in property (or the equivalent in law - a charge) to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

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06-09-2010, 11:51 AM

hardikvagadiya@gmail.com hardikvagadiya@gmail.com is offline

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Demand Clause on Mortgage

Demand Clause on Mortgage

A demand clause is an option protecting and benefiting the lender. It can be used to make the borrower pay their loan on sale of the property, rather than transfer their debt on the house to the buyer – this is also known as due on sale. This protects the lender when interest rates are climbing and he needs money to lock in higher rate loans.

A demand clause will also allow the lender to require repayment of the loan in full for any reason. In addition, the lender is also allowed to raise interest rates even if the borrower is not selling the property.

If you have a demand feature on the loan agreement, you should find out what exactly it is. A popular variation of the demand clause is the acceleration option which allows the lender to exact full repayment of the loan any time any obligation on the agreement is violated. Or, in other words, the lender has the right to call the loan.

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Last edited by hardikvagadiya@gmail.com; 06-09-2010 at 11:54 AM..

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clause, demand, mortgage

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