Definition of "Demand Clause"

Krista Streeter real estate agent

Written by

Krista Streeterelite badge icon

Keller Williams Island Life Real Estate

A clause in the note that allows the lender to demand repayment of the balance in full. A demand clause is even better (for the lender) than an acceleration clause. An acceleration clause allows the lender to call the loan if the borrower violates some contractual provision, such as a requirement that the loan must be repaid upon sale of the property. A demand clause allows the lender to demand repayment for any reason. For example, the lender can force you to accept a higher rate by threatening that if you don't agree, the loan will be called. The lender asking for a demand clause will no doubt disavow any intention of behaving in such a manner. But you don't put your head on a chopping block just because the executioner promises not to cut it off. The Truth in Lending Disclosure has a statement that reads //This loan has a demand feature,' which is checked 'yes' or 'no.' Some lenders will check 'yes,' even though the note has an acceleration rather than a demand feature.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Mortgage Terms

A derogatory term for lender fees that are expressed in dollars rather than as a percent of the loan amount. ...

Limit on the size of payment change on an adjustable rate mortgage. ...

The assumption of a mortgage, with permission of the lender, from a borrower unable to continue making the payments. ...

Advice on where to go to get a mortgage. A borrower can always select a loan provider by throwing a dart at the Yellow Pages. A referral is of value if it raises the probability of a ...

A letter from a lender verifying that the price and other terms of a loan have been locked. Borrowers who lock through a mortgage broker should always demand to see the lock commitment ...

The interest rate used in calculating the initial mortgage payment in qualifying a borrower. The rate used in qualifying borrowers may or may not be the initial rate on the mortgage. On ...

Total costs charged to the borrower that must be paid at closing, by the borrower, the home seller, or the lender. In dealing directly with a lender, settlement costs can be divided into ...

Same as term Qualification: The process of determining whether a prospective borrower has the ability to repay a loan. ...

An upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., '3 points' means a charge equal to 3% of the loan ...

Popular Mortgage Questions