Which provision in a mortgage allows the lender to demand immediate payment of the entire outstanding loan balance if the borrower defaults?

The provision that allows a lender to demand immediate payment of the entire outstanding loan balance if the borrower defaults is known as the acceleration clause. This clause is a critical aspect of mortgage agreements because it protects the lender's interests. When a borrower fails to comply with the terms of the mortgage, such as making timely payments, the acceleration clause enables the lender to "accelerate" the repayment schedule. This means that instead of waiting for the borrower to catch up on missed payments, the lender can require the borrower to pay off the entire remaining balance at once.

Understanding the importance of the acceleration clause helps delineate its function within the broader context of mortgage contracts. It serves as a safeguard for lenders by providing them with a legal means to mitigate potential losses due to a borrower's default. This provision is typical in most mortgage agreements and reflects the lender's right to protect their investment when the borrower fails to uphold their end of the agreement.