Basic Rate

The basic rate is a variable interest rate generally lower than the standard. It is commonly applied to basic or 'no frills' loans, where lower fees are offered in exchange for less flexibility and fewer features. With a basic rate loan, you usually give up redraw facilities, mortgage offset, early repayments, and other useful features. It may also come with monthly (instead of annual) keeping fees and fines for early repayments. The basic rate is also lower because of it variable nature, which means the borrower assumes the risk of paying more when the market interest rate rises.