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Welcome to the Finance glossary, we have made this glossary to make you more comfortable in finding and understanding the finance terms. This is brought to you by the loan uk .
Use the A-Z alphabetical list to find definitions of key finance terms.Our aim is to provide the mostcomprehensive glossary of UK financial terms on the internet
Finance Terminology - I
IFA
Independent financial advisor is an advisor who has no affiliation with other financial companies.
IG Premium
An insurance premium that insures the lender against any loss of money. This usually applies only if you borrow more than 70 per cent of the price asked for the property you are buying. Even though you have to pay for the insurance premium, you must remember that you are not covered by the insurance, the lender is.
Indemnity Guarantee Premium (IGP)
An illustration is an example of the monthly cost of a mortgage and other expenses associated with the loan such as set-up costs.
Illustration
Specialist loans for those aren't applicable for standard loan products.
Impaired Credit
Is a way of motivating the people to take out a loan with the lender by offering deals such as cashbacks.
Income
Provides protection if you are unable to make payments on an outstanding agreement.
Income Protection Insurance
Third party conformation of income.
Individual Saving Accounts (ISA)
A tax-efficient plan launched in April 1999 to replace PEPs. Permits investment in stocks and shares, cash deposits and insurance.
Individual Voluntary Arrangement (IVA)
IVA was introduced under the insolvency act 1986 with the intention of allowing an individual to avoid bankruptcy and make maximum possible restitution to creditors. An IVA is seen as preferable to bankruptcy as the debtor can retain his tools of trade and, in the case of a professional person, continue to practice, or hold company directorships. IVA's can be set up for either a person or a company. An insolvency practitioner petitions the high court for protection for a borrower debtor under an IVA. A proposal is put to the creditors of whom 75% must accept. If this is achieved, the arrangement becomes binding upon debtor and all creditors named in the agreement. If the debtor fails to meet payments under an IVA the insolvency practitioner is likely to petition for the individual to be made bankrupt. Whilst bankruptcy normally lasts for only three years some creditors insist that IVA's last a longer period.
Inflation
Increase in earnings or prices, which change in accordance with price inflation, and the national average earnings.
Inheritance Tax
Tax payable on your estate when you die and possibly on certain gifts during lifetime if in excess of the nil rate band £7,700 this is based on the rate for the tax year 2002/2003.
Initial Rate
The payment of interest to cover the period between the date of completion and the normal date from which an interest payment is due. For example if mortgage payments are normally due on the 30th of a month and the loan completes on 14th march, the first monthly payment may be due one month from 30th march, on 30th April. Any interest due for the period from completion until 29th march will be due with the initial mortgage payment. Therefore, the borrower's first mortgage payment will normally comprise one full month's payment plus the initial interest.
Insurance
Accident, sickness & unemployment (ASU) insurance cover arranged by the borrower to protect against inability to meet mortgage payments. This cover should more accurately be described as accident sickness and redundancy insurance as unemployment cover is generally seriously restricted to cover only events that are entirely beyond the control of the insured person. Typical exclusions include dismissal following professional misconduct and any act of voluntary redundancy. The accident and sickness cover will also be subject to major restrictions such as any act of self-injury or any injury related to the use of alcohol or drugs. Buildings insurance covers the structure of the building, which you must have. Where the property is leasehold the buildings insurance will normally be arranged by the freeholder and the cost charged on to the leaseholder within the service charges payable. Conditional insurance policy that has to be taken out as a condition of obtaining a loan, which normally must be taken out via the lender's agency. Contents insurance this is the insurance of property within your home i.e. Furniture, clothing, personal possessions etc. As distinct from the buildings insurance. Whilst lenders will be keen to offer contents insurance to borrowers, it is not essential that you should have it. Some policies offer a wider, all-risks wording. General insurance companies identify different types of insurance policy as falling into different branches. For instance the life branch covers the insurance of people and is generally known as life assurance. The insurance of property is known as personal lines. Payment protections see accident, sickness and unemployment insurance. Personal lines see general insurance. Terms simplest form of life assurance. The insured person or persons are covered against death within a fixed period subject to the payment of the premiums, which is normally monthly or yearly. If an insured person dies within the policy term the sum assured is paid out. If all insured persons survive the term the premium has been spent and the insurance ends with nothing being paid to the policyholders.
Interest Only
Mortgages where you pay off the interest only.
Interest Only Mortgage
A loan where only payments of interest are paid to the lender during the term of the loan. All mortgages other than capital and interest repayment loans are a form of interest only loan. Some lenders will allow loans to be set up without any specific provision to repay the capital at the end of the period this is known as a pure interest only loan.
Interest Rate
Percentage of your loan that a lender charges each year for lending you money.
Intermediaries
Broker or person who attempts to sort and arrange financial packages for you.
Introducer
Person who introduces a loan to a lender.
IPT
Insurance premium tax.
Irregular Earned Income
This is any additional income over the basic salary that is of an unusual nature; additional payments to which the employee may be entitled but which are not received on a regular basis.
ISA
A tax free saving scheme, which allows investors to save up to £7,000 a year in shares, cash, or insurance policies, without having to pay any capital gains tax when the portfolio value rises.
IVA
Individual voluntary arrangement (IVA).
Illiquidity
The difficulty of changing your investment back into cash.
Income share
Class of share within a split capital investment trust that receives a high dividend yield.
Indemnity insurance
An Insurance which is designed to protect a mortgage lender against the risk of you defaulting or not being able to repay the mortgage. The policy is usually imposed upon by the lender at the start of the loan and the premium payable is determined by the level of perceived risk to the home lender of you defaulting on the loan.
Independent financial advisor (IFA)
An investment adviser who must consider to survey the whole financial services market for a product that best suits your particular circumstances. They are bound by their profession's rules to give independent advice.
Index-linked investment
An investment that increases in value each year by the rate of inflation or by a fixed percentage above inflation. Index-linking is mostly associated with income-producing investments, such as, government issued gilts.
Individual savings account (ISA)
The new tax-exempt savings scheme launched in April 1999 as a replacement for the personal equity plan (PEP) and tax-efficient special savings scheme (TESSA). ISAs can be used to invest in a very wide range of investments and consist of three components: cash (bank and building society accounts and National Savings), insurances (investment-type insurance plans) and stocks and shares ( Unit Trusts, OEICS, investment trusts, direct investment in shares, corporate bonds and gilts). From 2000-01 the annual investment limit is £5,000.
Inflation
The general increase in prices over time. It has the effect of reducing the buying power of money. The most common measure of inflation is the retail prices index (RPI).
Inheritance tax (IHT)
This is a tax that is levied on the value of your estate (all the assets you own) when you die. You only pay inheritance tax (at a rate of 40%) once your estate value exceeds a certain limit - for the tax year 2001-2002 the limit is £242,000
Initial Public Offering (IPO)
The term used in America for a new share issue by a company coming to the stock market for the first time.
Insider dealing or insider trading
This refers to the illegal use of privileged information which, if made public, would significantly affect the share price. For example, if someone knows that a company is about to make an announcement which will affect the price of its shares; it would be an insider dealing if he/she uses that information to buys or sells shares in advance of the announcement to make a profit.
Institutions
These are organisations which are in the business of holding assets, such as, pension funds, unit trusts and insurance companies.
Intangible asset
An intangible asset is an asset that you cannot touch but appears on the balance sheet, such as, brand name, patent or copyright.
Interest cover
The number of times the interest payments on debt can be covered by the company's profits.
Intestacy
Refers to dying without making a will. A situation where a set procedure is used to distribute your assets rather than how you wanted to.
Investment club
A group of individual investors who club together to buy shares on a collective basis and then share the profits made. This has the advantages of reduced transaction costs, shared knowledge and diversification.
Investment trust
Investment trusts are companies whose business is to investment in the securities of a wide range of other companies. Like unit trusts, they pool together the money of many investors in order to invest it in a portfolio of companies which will be more varied than what small investors could achieve on their own.
Investment trusts are closed ended, which means that they have a fixed amount of capital which is divided into shares and then purchased by investors. They pay dividends to shareholders from profits which arise from their investment income.
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