Earlier this year I wrote about the High Court’s decision in Houssein v London Credit, where the court upheld a substantial default interest clause and rejected the argument that it was an unenforceable penalty. The case has now returned to the Court of Appeal - and this time the focus was on something far more practical: what a borrower must actually do to stop interest running on a secured loan.
It’s a point that matters to anyone dealing with refinancing, bridging finance, or a lender who refuses to accept repayment. And it’s one of those areas where borrowers often assume the law works one way, when in reality it works quite differently.
What the Court of Appeal Was Asked to Decide
The judge, Lord Justice Lewison identified three issues:
The second and third questions were dealt with swiftly - the default rate wasn’t a penalty, so statutory interest didn’t arise. The real substance of the appeal was the first question.
The Tender Principle: What Actually Stops Interest Running on A Secured Loan
Borrowers often assume that offering to repay a loan - especially during refinancing - should stop interest running on a secured loan. The Court of Appeal has now confirmed that this is not the law.
To stop interest running on a secured loan, a borrower must make a valid tender. And a tender is far more demanding than most people realise.
A valid tender requires the borrower to:
The Court of Appeal repeated the classic formulation: the money must be “set aside” and “available on demand”. Anything short of that is not a tender.
Why the Borrowers Thought Their Offers Should Stop Interest
Seen in isolation, the borrowers’ argument might look surprising. But once you place it in the real‑life context of refinancing, their position becomes much more understandable - and the judgment itself helps explain how they reached that view.
The borrowers were actively trying to refinance. They had instructed brokers, obtained proposals from alternative lenders, and made repeated offers to redeem the loan. From their perspective, they were doing everything a reasonable borrower could do: they were ready to repay, they had a new lender lined up, and, from their perspective, the only thing preventing redemption was the lender’s refusal to cooperate. It felt counter‑intuitive that interest should continue to accrue while they were trying to pay the loan off.
The Court of Appeal recognised this dynamic but made clear that it does not meet the legal test for tender. Refinancing proposals do not amount to “funds immediately available”, and they do not satisfy the requirement that money be “set aside” and “available on demand”. As Lewison LJ explained, the fact that some offers even exceeded the amount ultimately due did not dispense with the strict requirements for a valid tender. No funds had been set aside. No money was immediately accessible. Everything depended on the refinancing completing - and until it did, interest continued to run.
In other words, the borrowers assumed that being in a position to repay was the same as tendering repayment. The Court of Appeal has now confirmed that the law draws a sharp distinction between the two.
A Practical Lesson for Borrowers: Why Refinancing Offers Don’t Stop Interest Running on A Secured Loan
It’s easy to slip into thinking of refinancing as a collaborative exercise, but secured lending is a formal commercial relationship. A lender is entitled to rely on its contractual rights, and it is not obliged to accept repayment on terms that are unclear, conditional or dependent on third‑party funding that has not yet materialised. That may feel unhelpful from a borrower’s perspective, especially when refinancing is underway, but the law does not treat it as unreasonable.
This is why refinancing proposals, however promising, do not stop interest running. The Court of Appeal made it clear that an offer to repay - even one backed by a new lender - is not enough. Interest only stops when repayment is genuinely available in the way the law requires: funds must be immediately accessible, set aside, and ready for payment on demand.
In Houssein, the borrowers’ repayment offers were tied to proposed refinancing transactions. No money had been set aside. No funds were immediately available. And some offers even exceeded the amount then outstanding. None of that mattered. Because the funds weren’t available on demand, there was no tender -and interest continued to accrue.
Good intentions and active refinancing are not enough. Only a valid tender stops interest.
What Borrowers Should Take From This
If you’re refinancing a secured loan, or dealing with a lender who refuses repayment, it’s important to understand that:
This is a demanding test, and in practice it means interest will continue to run until the loan is actually repaid, unless the borrower takes very specific steps to make a tender.
Final Thought
The Court of Appeal’s decision brings welcome clarity to a point that is easy to misunderstand: interest only stops when repayment is genuinely available, not when it is merely offered. In a secured lending relationship, contractual rights matter, and refinancing activity or good intentions do not replace the need for a valid tender. For borrowers, understanding that distinction can make a meaningful difference to the cost and strategy of resolving a secured lending dispute.
Legal disclaimer The matters contained within this article are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to its’ accuracy, and no liability is accepted for any errors or omissions. Before acting on any of the information contained in this blog, expert advice should always be sought.
© Melissa Worth, October 2026