What does a due on sale clause allow the lender to do?

A due on sale clause gives the lender the right to demand immediate repayment of the loan upon the transfer of the property to a new owner. This means that when the property is sold, the lender can require the borrower to pay off the remaining loan balance at that time rather than allowing the new owner to assume the mortgage. This clause serves to protect the lender's investment by ensuring that they can reassess the risk associated with the loan based on the new ownership, rather than allowing potentially less qualified buyers to take over the mortgage without the lender's consent. It reinforces the lender's control over the loan and ensures they can evaluate new borrowers on their creditworthiness.