Disadvantages of Borrowing Money from the Bank

Answer 3(a)
The best third-party lender in this situation is the banking firm. When one person
does not have sufficient capital in order to finance the best option is borrowing
from bank. As the bank does not exert any pressure and influence on the
ownership of the assets Bank loan also involves a lot of different factors involved
into it the fees to be charged, the term of loan, the interest rate to be charged by
bank and so on. These will also differ from one bank to other, individual will
select on the basis which favours the most and can negotiate better for better
terms. Borrowing from bank also helps in the improvement of credit in the
process of taking loan from the bank. As taking loan from bank and making
payment on time will actually help to improve the credit score. (LaMarco, 2020)
Answer 3(b)
The best third-party lender(s) if one has to also construct this complex as well
will be the same as above the banking firm. As the banking firm allows one to
make purchase in large. When the loan is taken, the bank does not tell you what
you need to do with that particular money. As loan taken from others like from
non-banking firms they exerts influence over the money .Sometimes one also
need to transfer a piece of ownership in order to obtain the capital. (LaMarco,
2020)
Answer 4
The long-term lender (bank) will probably propose specific terms and conditions,
covenants and requirements in the mortgage documents. The items the lender
will place on the proposed mortgage (or any mortgage) contract to protect the
loan are here in below:
 No more loan can be taken on such respective asset.
 Timely disbursement of EMI (Why do banks add covenants to the loan
agreements, 2020)
The covenant or condition is important due to few reasons:
 In order to maintain the loan quality
 To keep adequate flow of cash
 In order to preserve the equity
 In order to keep an updated picture of the financial performance of the
bank.