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Mortgage in United Kingdom
GLOSSARY
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IFA
Independent Financial Advisor. An advisor who has no affiliation with other financial companies.
Illustration
A quotation prepared for a potential borrower that shows the cost of a mortgage, usually on a monthly basis and other expenses associated with the loan such as set-up costs.
Impaired Credit
The term applied to someone with a poor credit rating history owing to late mortgage payments, County Court Judgements (CCJs) or bankruptcy etc. If you have an impaired credit record you will usually need a sub-prime mortgage charged at a higher interest rate than standard.
Impaired Credit Mortgage
Impaired credit mortgages are specialist loans for customers whose credit problems disqualify them from using mainstream lenders' standard products. Some lenders specialise in loans like these, which are also known as adverse credit loans.
Improvement grant
A grant made by the local authority towards the cost of repairing or improving property. Further information with regard to grants is available from your local council.
Income
The amount of money a person earns, whether from employment or other sources.
Income Multiplier
The formula used by lenders to calculate how much a prospective borrower can borrow. Normally this amount will be three or 3.25 times the person's income, or for joint applicants it is typically 2.5 times joint income. Some lender use a lower calculation and some higher.
If self-employed the applicant's accountant may be asked to confirm income either by letter or by audited accounts for a specified period.
Income Protection (Insurance)
Provides protection if you are unable to make payments on an outstanding agreement. Is a way of motivating the people to take out a loan with the lender by offering deals. see Permanent Health Insurance and Accident, Sickness and Unemployment Insurance.
Income Tax
A government tax that is levied on an individual's earned income.
Independent Financial Advice
The Financial Services Act introduced the concept of "polarisation" - people advising on, or selling, regulated financial products (investments, pensions etc) had to sell either one company's products, or provide advice about the range of products in the market.
Independent Mortgage Advisers
Someone who can advise you on mortgage that is right for you, taking your circumstances and the full range of products available in the market.
Index
A published interest rate, such as the Bank of England base rate, or the London Inter Bank Offer Rate (LIBOR), which is used to base the interest rate on a variable rate mortgage.
Index Tracker
A type of mortgage in which the rate of interest charged follows exactly ('tracks') any changes in a published interest rate, for instance the Bank of England base rate.
Individual savings account (ISA) mortgage
An interest only mortgage linked to an Individual Savings Account fund, which is designed to pay off the loan at the end of the period.
Individual Saving Accounts (ISA)
A tax-efficient plan launched in April 1999. Permits investment in stocks and shares, cash deposits and insurance.
Individual Voluntary Arrangement (IVA)
An IVA is a negotiated settlement with your creditors, which allows you to repay your debt on a monthly basis over a fixed period of time, usually 5 years and to avoid bankruptcy. If an IVA fails, Bankruptcy (see Bankruptcy) can follow.
Inflation
The general rise in prices over time.
Inheritance Tax
Tax payable on your estate when you die, charged at 40% on anything over £285,000 (2006-2007 tax year)
Initial Fees
An estimate of the total fees payable for arranging a mortgage, including items such as solicitor's fees, survey costs and reservation charges.
Initial Interest
As well as being the first interest payment on a mortgage, the Initial Interest is also usually higher than subsequent payments as it covers the period between the date of completion and the date when the first payment is due.
Initial Rate
The interest rate that applies between the start and end of any discount period on a mortgage.
Instruction
This term is used when the estate agent is formally instructed by a property owner to market the property, usually by private treaty, in order to find a purchaser. The resulting contractual agreement confirms the terms under which the instruction is offered by the vendor and accepted by the estate agent.
Interest
The premium which a borrower must pay a lender in return for use of the lender's money.
Interest charges (mortgage)
The charges that banks make on a loan, calculated as a percentage of the amount borrowed.
Interest Only Mortgage
Interest-only mortgage stays the same throughout the mortgage term and requires only the interest charged on the loan to be repaid during the period of the loan. Most lenders will expect to see evidence of a repayment vehicle in place to repay the loan at the end of the mortgage term. This might be an endowment policy, ISA on possibly the case element of a pension plan.
Interest Rate
Percentage of your loan that a lender charges each year for lending you money.
Interest Rate Charge Structure
The procedure of offering different mortgage rates depending on factors such as LTV, your income history, and credit rating.
Intermediary
A company which matches borrowers with lenders, as well as undertaking a certain amount of application processing. Typically an intermediary will receive a fee directly from the lender for these services. see also Mortgage Adviser, Mortgage Broker.
Intermediary
Broker or person who attempts to sort and arrange financial packages or other product for you.
Introducer
A person who introduces potential borrowers to a lender, insurer or broker.
Inventory
A list which describes the condition of furnishings and contents of a leased property at the commencement of the tenancy in order that any dilapidation during the tenancy can be identified.
IPT
Insurance premium tax.
ISA (Individual Savings Account)
A tax-free investment product whereby individuals can place shares, cash or life insurance, or a combination of these, up to a specified value.
ISA Mortgage
An interest only mortgage that uses an ISA product to repay the loan.
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