An IFA is authorised through training and examination to advise upon and arrange financial products for a client from any provider.

Inheritance tax comes into force when someone dies. Their estate is valued (all assets including property, valuables and cash less any debts still owed) and IHT calculated as % of the net estate value. A tax-free allowance exists for everyone in the UK.

A method used by mortgage lenders to determine how much they will lend. Typically 3x your income or 2.5x  joint income. This is still a simplistic approach and many lenders now include an assessment of ability to repay to allow for payments to other lenders, utility companies and general living costs.

Income tax is payable on any income, earned or derived from savings and investments.

A financial product that is index-linked will follow any changes in inflation.

General price rises in the economy.

Now called HMRC (Her Majesty’s Revenue & Customs), this is the government body who collect taxes and National Insurance contributions from companies and individuals.

An insurance policy provides compensation for loss or damage to property or other items in exchange for a premium.

Purchasing something on credit would normally involve payments of interest.  Where no interest is charged this is said to be interest free credit.

An interest-only mortgage only requires payment of the interest on the loan. No payments are made towards the capital borrowed. To repay the capital the borrower may take out a savings or pension plan or expect to have sufficient funds through some other means to repay the loan when the term ends. Alternatively, the property may be sold to pay off the loan.

Investment Clubs enable people to group  together and invest in the stock market with larger sums of money.

An investment trust is a company in which shares can be bought, and which must be quoted on a Stock Exchange. It is a 'pooled' investment, with many investors owning shares in the same trust. The investment trust makes its profits by investing in the shares of other companies.

 The Individual Savings Account was introduced in 1999 to encourage anyone over the age of 18 to save. Returns from ISA savings are free of income tax and capital gains tax.

When any land or property is sold in England & Wales the official register is updated to reflect who owns it and whether any legal claims (called charges) have been made against it. The Land Registry is the government body who maintains the register.

A leasehold property means that while the property is owned by one person, the land on which it sits is owned by someone else. The leasehold agreement will allow the property to remain there for a set term normally 999 years. Changes in ownership of the property do not normally affect the remaining term on the lease.

LIBOR is the London Interbank Offered Rate and is the rate of interest at which banks borrow funds from each other.

Loan to Value which is ratio between the size of loan and the property value. Higher LTVs are more of  risk to the lender who may then charge a premium to cover the additional risk.

This is a tax-free savings account with a £7,000 investment limit each year. The investment can be fully in stocks and shares or up to £3,000 in cash savings and up to £1,000 in life insurance investments. Returns from an ISA are free of income tax and capital gains tax.

A Mini Cash ISA has a maximum investment limit of £3,000 per year with all returns being free from income tax and capital gains tax. The account can be instant access or notice accounts

These accounts pay interest each month.

A mortgage is a loan to buy a property where the property itself acts as security to ensure the loan is repaid. In the event that payments are not kept up to date, the mortgage lender can start court proceedings to repossess the property.

If a person is unable to work or has been made redundant this type of policy will provide a monthly income to help pay the monthly mortgage payments.

A mutual organisation is owned by its members not by shareholders.

A tax on salary collected by HMRC and used to fund state benefits such as pensions and child benefit payments.

A  government savings scheme for many years only available through the Post Office but now online. NSI savings schemes are risk free.

When the value of a property is less than the outstanding debt, the borrower is said to be in a position of negative equity. The situation occurs most often when a high loan-to-value loan has been made and shortly after there is general decline in property prices before any substantial growth in the property value has occurred. The situation is made worse if the borrower is in arrears – missed mortgage payments increase the outstanding debt.

Interest paid on savings and investments where the basic level of income tax has been deducted.

Accounts that require notice to be given to withdraw funds. If the withdrawal is required immediately an interest penalty will be applied.

A type of unit trust that has converted into a company.

An offset mortgage allows you to keep your balances e.g. mortgage, savings, current account etc in separate accounts but all balances are offset against each other which may reduce the interest paid on the mortgage and it being repaid early.

Many banks and building societies provide offshore accounts based in the Channel Islands and the Isle of Man. Interest is paid gross but must be declared as income to HMRC.

An overdraft enables people to spend even when there is insufficient money in their bank account.

An agreed overdraft facility will incur a set-up fee and interest on the amount overdrawn.  An unauthorised overdraft is where the customer has gone overdrawn without permission or gone beyond an agreed limit. A higher interest rate will be charged together with other additional, hefty fees. In 2008 the issue of bank charges was the subject of a High Court Test Case in the UK.

Where a borrower pays more than is required each month to the lender, he/she is aid to have overpaid. The loan or mortgage will be repaid earlier than scheduled if overpayments are maintained.

An account that charges a monthly fee but often offers benefits such as free travel insurance and reduced overdraft rates.

A period during which no payments are made on a loan or mortgage.

A pension is a long-term savings plan where contributions are invested in the stock market and other assets to provide a pot of money at retirement. The scheme can either be arranged by the individual or can be offered by an employer to its employees. In the case of a personal pension, some of the money at retirement can be taken as a tax free lump sum,  the remainder must buy an annuity which provides a regular income until death.

A company scheme can also include a tax free lump sum with a regular pension based either on the final salary at retirement of the individual or on the value of the fund.

Personal Equity Plans were tax efficient schemes investing in shares and unit or investment trusts. They were replaced by ISAs in 1999.

A loan taken out by an individual normally with no assets offered security. The loan is over a fixed term with fixed monthly repayments. Interest rates are normally higher than mortgage rates as there is no security to back up the loan. Personal loans are often used for consumer purchases such as cars and holidays and are generally covered by the Consumer Credit Act.

Loans are normally for between 1 and 10 years and for up to £25000. Monthly payments are made on a capital repayment basis not interest only.

A tax-efficient savings plan that enables you to save for retirement. The individual makes regular and/ or one off contributions which attract tax relief. On retirement part of the fund value can be taken as a tax-free cash lump sum. The remainder of the fund must be used to buy an annuity which provides a regular income to help a person in retirement.

This refers to mortgage schemes such as fixed rates where the unused term of the special scheme can be used as part of a new mortgage when a borrower moves house.

The amount paid for insurance cover.  Can be either annual or monthly.