Is it OK? Well, there is no simple yes or no answer to that, because it depends on a number of factors, not to mention the ethical and moral implications. Here are a few questions that need to be answered, which you do not have to answer here, just be honest with yourself. Are you charging the client accordingly? As in, hey Mr. Client-Dude, I am working on this free template that you wanted, but I am only charging you for my time to make the modification/customization you wanted. Versus, hey Mr. Client-Dude, I totally got you covered with this completely original template for WordPress that I totally did not illegally plagiarize from a freely available template, coz I ain’t no scum-bag like that. Are the modifications you are making, comply with the applicable copyright, trademark, End-User License, etc.? As in, hey Mr. Client-Dude, this is a freely available template that meets most of your needs with some modification, but it still has the original template designer information, etc. Versus, trust me Mr. Client-Dude, I only put my name on original work of my own because it protects me and my creative genius from douches that like to steal shit and call it their own and charge unknowing peeps like you a shit-load of money. A real simple rule of thumb is this; treat others as you would like them to treat you. This is especially true for anyone that wishes to start and/or remain in business as opposed to getting sued for using scammer tactics (i.e. committing fraud by deception, theft, copyright infringement or any number of the heftier versions that come with stiffer penalties).