Optimum credit

Interest rates

All information correct at :

16th January 2021 11:49 pm

Optimum Base Rate (OBR) is currently :


If your Mortgage Offer was dated on or after 15th February 2016, details can be found below and by reading the relevant sections of the General Mortgage Conditions booklet.

If your Mortgage Offer was dated before 15th February 2016, please refer to your Loan Agreement or contact us for details.

You should read this together with the Second Charge Mortgage Offer sent to you prior to completion and our General Mortgage Conditions which are available here.

Other than during a Fixed Rate Period the Interest Rate will be a variable rate that is, or is linked to, a Reference Rate specified in the Offer and that we control. We may vary the Interest Rate by varying the Reference Rate in accordance with the Offer and Condition 4 of the General Mortgage Conditions.

We may reduce the Reference Rate for any reason without giving you notice first. If we do not give you notice before the reduction we will do so as soon as possible afterwards, telling you when the change takes effect.

As well as our rights under Condition 4.2 and the provisions of Condition 16.3 of the General Mortgage Conditions, we may increase the Reference Rate to reflect any one or more of the following:

  • Changes to the cost of raising the finance to allow us to make loans. These costs will typically be linked to changes in the rate (or rates) used for lending by banks and other financial institutions to each other;
  • Changes in the Bank Rate of the Bank of England (or any successor to it);
  • Changes in our administrative or other costs in providing loans or running our lending business that are beyond our reasonable control; or
  • Changes in legal or regulatory requirements or guidance, or new decisions of the courts or Ombudsmen.

Any increase in the Reference Rate will be proportionate to the reason(s) for the increase.

On each occasion that the Interest Rate changes we will give you at least 7 days’ notice of the change.

If we wish to change the Monthly Payment, we must first give you at least 14 days’ notice of the changed amount. The notice will say when you must start paying the changed amount.

We would like you to be aware of an upcoming industry-wide change to LIBOR, which will be relevant to Optimum Credit mortgages.

What is LIBOR?

LIBOR means the London Interbank Offer Rate. This is the rate of interest at which banks offer to lend money to one another on a short-term basis in the wholesale money markets in London. Each day a select panel of banks are required to submit the rate at which each could borrow funds from another. These submissions are compiled and used to calculate LIBOR.

When LIBOR changes, this may affect the rate at which a lender can borrow money, sometimes referred to as their ‘cost of funding’. LIBOR is therefore used by many lenders (including Optimum Credit) as a reference for setting variable interest rates on mortgage loans and other financial products. 

What is changing?

The Financial Conduct Authority have advised that from 1 January 2022, they may no longer require the panel banks to submit rates for the calculation of LIBOR. As a result, LIBOR may not exist beyond this date. Even if LIBOR does exist beyond this date, it will no longer reflect Optimum’s ‘cost of funding’.

Alternative reference rates to LIBOR have been identified by the UK’s Central Bank Working Group, although it has not yet been confirmed what alternative will be adopted by the market and when the transition will be made.

How will you be affected?

If your Optimum Credit second charge mortgage is on a variable interest rate (or will become variable after an initial fixed-rate period), we may vary your interest rate in accordance with our cost of funding. Our cost of funding is currently affected by changes in LIBOR. Once LIBOR is discontinued (or ceases to reflect our cost of funding) we will calculate our cost of funding by reference to different factors, which may include alternative/successor rates to LIBOR. Please refer to the information in the sections above for our current approach and we will update this section with the approach we intend to take.

Optimum is committed to minimising the disruption that our customers experience as a result of the upcoming change to LIBOR. We are closely following the industry’s developments and we will write to all affected customers when further information is available.

If you have any questions, please contact our customer service team on 0333 014 3125.

Optimum Credit - Second Charge Mortgages for homeowners