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.
Impaired credit
Impaired credit loans are specialist products 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.
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).
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 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.
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.
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. 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.
