Mortgage Dictionary: I

Please view the glossary definitions from our list below. Some terms have a dedicated page with a longer definition. This is available by clicking on the "more about " link.

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).