Optimum credit

Interest rates

All information correct at :

21st January 2020 12:51 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 your Second Charge Mortgage Offer sent you prior to completion and our General Mortgage Conditions which are available by following this link.

Unless you are in a Fixed Rate Period the Interest Rate will vary in accordance with the Offer and Condition 4 of our General Mortgage Conditions. If you are in a Fixed Rate Period, the Interest Rate will not vary during the Fixed Rate Period.  On the expiry of the Fixed Rate Period the Interest Rate will change as stated in the Offer and thereafter will vary in accordance with Condition 4 of our General Mortgage Conditions.

We may change the Interest Rate for any of the reasons stated under conditions 4.3 to 4.4 of our General Mortgage Conditions or where the Offer otherwise provides for the Interest Rate to change.

We may reduce the Interest 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 took effect.

As well as our rights under Conditions 4.2 to 4.3, and the provisions of Condition 16.3.4 of our General Mortgage Conditions, we may increase the Interest Rate to reflect any one or more of the following:

  • Changes which occur, or which we reasonably anticipate may occur, in our costs of funding our business, including the cost at which we raise(d) finance to allow us to make loans. These costs will typically be linked to changes in the rate used for lending by banks and other financial institutions to each other. Our costs are currently based with reference to the London Interbank Offered rate for deposits of 1 month duration as published at the ICE website (LIBOR). We will typically assess our cost of funds by looking at the LIBOR rate each month (we currently do this on or about the 10th of the month) and, if the rate of LIBOR has changed by more than 15 bps from what it was the previous month, we will change the Interest Rate (and this could involve a reduction or an increase as applicable). This is our current policy but it may change to reflect reasonable changes in our funding costs or model, or changes in available interest rates (for example if LIBOR is no longer published we will use the nearest equivalent successor to it which reflects our cost of funding). We will tell you if our approach changes,
  • changes in other costs affecting our business which are outside our reasonable control,
  • changes in legal or regulatory requirements  or guidance, or  new decisions of the courts or Ombudsmen,
  • to ensure that our business is operated prudently, efficiently and competitively.

Any increase in the Interest 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 will 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