What does a due-on-sale clause allow lenders to do in Georgia?

A due-on-sale clause is a provision commonly included in mortgage contracts that enables lenders to demand full repayment of the outstanding loan balance when the property is sold. This clause protects the lender's interests by preventing a new owner from assuming the mortgage under the original terms, which could potentially lower the lender's security if property values fluctuate or if market conditions change.

In Georgia, as in many states, when a property subject to a due-on-sale clause is sold, the lender can enforce this clause, requiring the borrower to pay off the entire loan amount. This ensures that the lender can reassess the creditworthiness of the new borrower, potentially at a higher interest rate that reflects current market conditions.

The other options do not accurately reflect the function of a due-on-sale clause. For instance, there isn't any provision within this clause that allows for partial payment arrangements, extensions of loan terms, or refinancing without the lender's consent. Those activities would not provide the same level of protection for the lender and could introduce more risk into the lending process.