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Mortgage Broker

Real-Life Activities

Real-Life Decision Making -- Solution

You recommend monthly payments.

This option could save your clients money. "It would be cheaper because monthly payments cost less than paying in advance," says Leanne Wilson.

Why? Because if they pay up front, they have to pay just as much as they would over six months. Plus they'd have to pay the pre-payment penalty fee. Many lenders will charge this penalty to cover the interest they will lose if the loan is paid back before it is due.

"Most private lenders would generally want consistent payments," says Wilson. On the other hand, it creates an extra monthly expense that may drag down the business as it goes through its growing pains.