What are the long-term sources of finance?
Different type of source of finance can be a mortgage, what is long-term sources of finance. This method is a long-term of borrowing and can be used to buy for example premises. Interest is added to the loan at the beginning, and the whole amount is usually repaid in equal monthly instalments over a period of years. The longer the loan and the higher the collateral, the lower the interest rate will be. The mortgage can be paid in a long period, and fixed interest rates can be arranged so that the organisation knows what is monthly payments will be for the foreseeable future. Unfortunately, failure in payment of monthly rates can result in the property being repossessed. Also, before mortgage agreement is made between bank and organization, organization need to put 10% deposit on the value of the property. When interest rates are not fixed, monthly repayments can vary greatly depending on current interest rates.