Don't always pick the lowest interest rate

Updated: Feb 19, 2020

I had a client come to me the other week who wanted to buy a run down property to live in and do up.

After digging a little deeper about their situation I found out that they only had temporary finance to cover the extensive cost of the refurb and that they would need to refinance in 6 months time to pay back all the unsecured credit card debt that they would have accrued and they assumed that they would be able to do this with the lender we were about to proceed with.

Alarm bells rang for me as the lender that we were about to place them with did not allow such refinancing for the first 12 months of a mortgage, so I had to do some more research.

Thankfully I found another lender that would allow refinancing for debt consolidation after only 1 month. However, their interest rate was not quite as favourable as the previously recommended lender but because they met the clients needs exactly the slight increase in monthly payment was not as important as the greater goal, and avoid a possible catastrophe further down the line

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