IFA

Independent Financial Adviser

IHT

Inheritance Tax.

Illustration Annuity

This is a estimation of the return you might receive from an investment, based on standard growth rates, charges are taken into account. The actual return may be higher or lower than the estimation.

Immediate Annuity

This is an annuity where payments are made straight away.

Impaired Credit

Impaired credit mortgages are specialist loans for customers whose credit problems disqualify them from using mainstream lenders standard product.

IMRO

The Investment Management Regulatory Organisation which regulates the management of our unit trusts.

In Advance

Beforehand or up-front.

In Arrears

Total unpaid debt, debts not paid by the due date.

Income tax

Income tax is tax you pay on the income you earn each year above a certain amount. As well as your salary, income tax is also charged on interest and dividends you receive. The amount of tax you pay depends on the amount of money you earn and on your allowances.

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.

Independent Financial Adviser

In theory these intermediates 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.

Inflation

The continual aggregate rate of increase in prices.

Ineritance tax

A state tax levied on the recipient of an estate rather than on the estate itself. The tax varies by state and its severity in a given state usually depends on the kinship between the decease and the heir. Some states levy a tax on the estate instead of a tax on the amount inherited.

In-kind Contribution

Support in the form of goods or services rather than a cash contribution.

Inland Revenue

The Inland Revenue is the government department responsible for the assessment and collection of direct taxation on income, capital gains, stamp duties, corporation tax and inheritance tax.

Instant Access

This applies to bank accounts where you don’t lose interest by withdrawing your money without giving the bank notice.

Insurable Interest

A principle of insurance that states that someone may only take out insurance if they stand to suffer a financial loss from an event covered by a policy.

Intermediary

A person or organisation that offers advice and arranges policies for clients.

Interest

This is a percentage of your loan that a lender charges you each year for the priviledge of borrowing money. The prevailing level of interest charged by lenders depends largely on the economy and the Bank of England base rate.

Interest Only Method

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.

Investment Income

A company or an individual’s income which is derived from its investments, including interest and dividends on stocks and bonds.

Investment Trust

A financial institution that sells shares to individuals and invests in securities issued by other companies.

Irrevocable Trust

A trust in which the grantor gives up any right to amendments or termination. Income from an irrevocable trust is taxable to the beneficiary if disbursed or to the trust if not disbursed.

Individual Savings Account (ISA)

ISAs offer similar tax-free benefits to PEP’s but you can hold a wider range of investments.

ISA Mortgage

Interest only mortgage where you pay interest on the full amount of the loan for the full duration of the term. You also pay an agreed monthly sum in addition to your interest repayments. With this type of mortgage your payments go into the tax-free ISA savings vehicles which were brought in to replace PEP’s. They take a variety of formats: including cash life assurance policies such as endowments stock market investments such as shares unit trusts investment trusts and investment bonds or even a combination of the different holdings. The value of your investment hopefully accumulates over time and any growth is added to your balance free of tax. ISA mortgage are fairly flexible and usually allow you to overpay thereby hopefully reducing your mortgage term.