Below is a glossary of the terms you may not be sure about now and should understand when taking out a new mortgage. These are not legal definitions but clear everyday descriptions to help you make a more informed choice.
Any examples given are designed solely to simply illustrate the basics of the concept and are not to be taken as anything beyond that.
A lot of mortgage adviser regularly used terminology were banned in October 2004 and replaced by industry standard phrases to help consumers understand things better. The old terms have been included for reference purposes.
No information given here should be taken as advice.
| IDD |
See Initial Disclosure Document also Combined Initial Disclosure Document |
| IFA |
See Independent Financial Adviser |
| Illustration |
A document produced before the introduction of the KFI / Key Facts Illustration. |
| Impaired Credit |
The credit rating of a person with a less than perfect record of credit usage, for instance due to arrears on other loans, past CCJs or a past bankruptcy. |
| Income |
The amount of money a person earns. |
| 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. |
| Income Reference |
Written confirmation from a person’s employer stating the person’s earnings, length of service and level of permanency of the position. If self-employed, the applicant’s accountant is asked to confirm income either by letter or by providing audited accounts for a specified period; usually the last 3 years |
| Income Tax |
A government tax that is levied on an individual's earned income. |
| Independent Financial Adviser (IFA) |
A person qualified and regulated to advise on financial products such as mortgages, insurance and investment vehicles. |
| 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. |
| Index-linked |
Anything that tracks an index or known base such as the bank of England base rate, the FTSE. |
| Inflation |
The general rise in prices over time. |
| 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 Disclosure Document |
This gives you basic information about the company you are dealing with including level and type of service, fees, refunds, who to complain to etc. This document is used when the company is only talking to you in regards to one type of product e.g. mortgages only or car insurance only. It will be given to you at the start of any discussion or within 5 working days of an initial telephone conversation. |
| 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. |
| Insurance Guarantee Premium |
See Higher Lending Charge |
| Interest Only Mortgage |
A type of mortgage in which the borrower only repays the interest on the loan for the duration of its term, and repays the full loan amount at the end of the mortgage period. |
| 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 such as AH 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. |
| Introducer |
A person or company (broker or adviser) who introduces borrowers to lenders. |
| Investment Home Loan |
See Buy to Let Mortgage |
| Investments |
Savings that are designed to repay the principal on an interest only mortgage. |
| 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. |
Your home may be repossessed if you do not keep up repayments on your mortgage.
The actual rate available will depend on your circumstances. Ask for a personal illustration.
Think carefully before securing other debts against your home.
There will usually be a fee charged when we successfully arrange a mortgage / re-mortgage. The amount will depend on the complexity of your requirements and your personal circumstances, typically the fee charged will be 3% of the mortgage advance (minimum fee £3,000 up to a maximum of £10,000).
