This is the underlying cost to the Lender of funding a Loan. The Lender Margin will be added to this to give the Pay Rate of the Loan. The Cost of Funds differs from Lender to Lender and Loan to Loan. Base Rate is most commonly used for Residential Mortgages. BTL Mortgages are more commonly funded using Libor, as are Private Bank mortgages, Commercial Mortgages and Development Finance.