Jargon Buster
IFA - Independent Financial Advisor
In theory, these intermediaries should look at the entire
financial market before making a selection and offer unbiased
advice and access to all suitable financial products. they
sometimes still have access to special deals not on offer
elsewhere because they may subscribe to a mortgage panel
along with other advisers and brokers. Together they convince
lenders to provide special packages in return for their
continued custom. The only trouble is that they have to
deliver a certain level of business over a year to remain
on the panel, so they may favour some products over others.
Impact fees
Fees collected from developers of new homes to pay for schools,
parks and other facilities.
Impaired credit
Impaired credit mortgages are specialist loans for customers
whose credit problems disqualify them from using the lenders'
standard products. Some lenders specialise in loans such
as these, which are also known as ‘non-status’ loans.
Incidence of interest calculation
The frequency that the outstanding interest and ongoing
mortgage repayments are calculated. Charging interest on
the outstanding balance of your loan at the end of each
day, means you reap immediate benefits of any repayments
you make, since you will be charged interest on a smaller
debt each day. As long as you are making payments on time,
the more often interest is calculated the better for you.
This is a common feature of flexible mortgages, but is not
restricted solely to them. When interest is calculated annually,
repayments are not updated to include the reduction in capital
that arises from the payments you make throughout the year.
Income multipliers or multiples
The size of the mortgage that lenders offer, will often
be worked out by multiplying your income each year by a
set percentage.
Income protection insurance
Insurance designed to protect you if you are unable to continue
providing for yourself or others. Income protection will
not specifically pay off your mortgage, loans, private medical
treatment or special needs that arise through disability.
It will provide you with a regular weekly or monthly income
if you become unable to work as a result of accident, sickness
or disability. The amount of benefit that is paid out it
is not linked to your mortgage or other loan payments, but
your overall level of income.
Income references
Conformation of stated income provided by an employer or
certified accounts if self employed.
Indemnity
Applies to insurance policies and means the insurer will
basically make sure you are no better or worse off in the
event of a claim, taking into account wear and tear.
Indemnity Guarantee Premium
Additional one-off fee paid to the lender to protect them
against the borrower defaulting. Independent Financial Advisor
In theory, these intermediaries should look at the entire
financial market before making a selection and offer unbiased
advice and access to all suitable financial products. they
sometimes still have access to special deals not on offer
elsewhere because they may subscribe to a mortgage panel
along with other advisers and brokers. Together they convince
lenders to provide special packages in return for their
continued custom. The only trouble is that they have to
deliver a certain level of business over a year to remain
on the panel, so they may favour some products over others.
Independent surveyors report
A survey will tell you exactly what work needs to be done
to the building and whether there are any problems with
the property you didn't know about. This can help avoid
unpleasant and costly surprises after you have moved in.
As the buyer, it is your responsibility to find out what
you are committing yourself to. The seller has no liability
whatsoever once the purchase is complete.
Index tracker mortgage
The interest rate tracks an index such as the base rate
or LIBOR and often has a set percentage added to it.
Individual Savings Account
Tax-free savings plans that allow the individual to invest
in cash, stocks or shares or insurance.
Inflation
Sustained increase in price or earnings levels, commonly
measured by changes in the Retail Prices Index (price inflation)
or changes in the index of National Average Earnings (earnings
inflation).
Inheritance
Money, possessions or estate received from a friend
or relative who has passed away. Initial interest rate The
original interest rate on an adjustable mortgage.
Insurable title
Title to property that a company agrees to insure against
defects and disputes.
Insurance excess
Applies to an insurance claim and is simply the first part
of any claim that must be covered by yourself. This can
range from £50 to £1000 or higher. Increasing your excess
can significantly reduce your premium. On the other hand,
a waiver can sometimes be paid to eliminate any excess at
all. Always check the excess in your policy.
Interest accrual rate
The rate at which interest accrues on a mortgage.
Interest only mortgages
With an interest-only mortgage, your monthly repayments
to the lender consist only of interest on the total loan
amount. The interest payments will vary depending on the
interest rate being charged by the lender at the time. This
type of mortgage involves paying the lowest possible monthly
outlay to the lender, as no capital is included in the repayment.
Instead of repaying the capital, regular payments are put
aside in a suitable investment or savings plan. This grows
cumulatively and assumptions are made regarding its growth
in order to calculate a monthly repayment figure. If you
are fortunate, the investment will accumulate at a higher
rate than is required to pay back your loan on time, resulting
in a cash surplus at the end of the term. This is not always
the case however, and sometimes there can be a cash deficit
at the end of the term.
Interest rate
The is the percentage of your loan that a lender charges
you each year for the privilege of borrowing money. The
prevailing level of interest charged by lenders depends
largely on the economy and the Bank of England base rate.
If the Governor of the Bank of England and the Monetary
Policy Committee are worried about the economy overheating
and causing inflationary pressure, they may raise interest
rates. This makes it more expensive to borrow money and
therefore the overall demand for borrowing is reduced. Since
this is one of the most commonly used instruments for managing
the economy, we are subject to fairly frequent changes in
interest rate.
Interest rate cap
A limit on the amount interest can rise or fall during a
specified period of time on a variable rate mortgage.
Interim interest
Any payment due for the period from the day the mortgage
began up to the first payment date.
Interim statement
This is an additional statement of your mortgage account.
You are usually charged by your lender when you request
a copy of an annual statement previously issued or when
you request a statement outside of the normal annual statement
period. Costs £10 - £20
Intermediaries
Brokers and other intermediaries attempt to arrange suitable
financial products or policies for you. They can be fully
independent, part of a network that uses a panel of providers,
or tied to certain institutions in which case they can only
sell their products.
Intermediary
Brokers and other intermediaries attempt to arrange suitable
financial products or policies for you. They can be fully
independent, part of a network that uses a panel of providers,
or tied to certain institutions in which case they can only
sell their products.
Introducer
Inform borrowers about certain mortgages and ‘introduce’
them to the lender. Introducers receive a fee for passing
on new business.
Investment vehicle
The method chosen to invest money in order to repay an interest
only mortgage. E.g. pension, ISA or endowment.
IPT
Insurance premium tax. Tax on all UK general insurance under
Government control, currently charged at 4% (1/1/2000) of
the premium.
ISA
Individual Savings Account.
ISA mortgage
A mortgage loan funded by contributions to an Individual
Savings Account. ISAs provide tax-free growth, generated
mainly by stock market investment. The ISA aims to repay
the loan's capital at the end of its term, but the interest
element must be cleared separately as you go along.
