Incentive rate
A rate of interest charged for an initial period to attract business to the provider. Typically this might be a lower APR on credit cards for the first six months if existing balances are transferred to them. After the incentive period the rates will revert to the normal rates prevailing at that time.

Income Multiplier
Income Multipliers are used by lenders as one calculation in determining how much they are prepared to lend on mortgage. The most common multiplier used is 3 times a single income or 2.5 times joint incomes, whichever gives the higher figure. More generous multipliers are available from some lenders and lenders will be more flexible if the Loan to Value is relatively low.

Income Protection Insurance
(IPI) is insurance which - depending on the type of cover requested - provides you with a monthly income in the event of you losing your job or becoming incapable of working due to sickness or accident. You do not need to be a mortgage payer to take out this type of cover.

Income Tax
The tax payable on any income whether from employment or investment. If employed this is deducted from your wages under PAYE, if self employed it is paid bi-annually in arrears under Schedule D arrangements.

Index Linking
Linking something, usually the interest rate, to the rate of inflation. For example index linked National Savings Certificates promise a rate of inflation (measured by the Retail Price Index) + up to 3.20%, so investors are certain their capital will more than keep pace with rising prices.

Independent Financial Adviser (IFA)
A person or company that is able to give financial advice on all areas from unit trusts to insurance, from all the products available on the market (as opposed to a Tied Agent who can only advise on his own company's products). They may work on a fee basis, charging for their time, or on a commission basis which is paid to them by the product provider.

Individual Savings Account (ISA)
Details were announced in the budget on 17/03/1998 and the main details are as follows: The new account will start on April 6th, 1999 and will replace PEP's and TESSA's from that date. It will be guaranteed to run for at least 10 years. There will be a review after seven years and changes may be made to the terms after the initial ten year period has expired.
There will be a maximum investment allowed of £5000 per annum, of which £1000 can be put into life assurance and £1000 into cash (including National Savings).This annual limit will be raised to £7000 for the first year only - and up to £3000 will be allowed to be held in cash. The plans will be offered by Banks, Building Societies, Insurance Companies and Supermarkets and the Post Office. Savers will have the option of having one manager look after the three components of the ISA or having three separate managers looking after the cash, life assurance and stocks and shares. The fixed maximums per component will ensure that savers do not invest too much and break the rules.
The plan will be exempt from both income and capital-gains-tax. In addition a 10% tax-credit will be paid for the first five years of the scheme (until 5th April, 2004 ) on dividends received from UK equities. This also applies to UK equities that back the life assurance element. There are no statutory tie-in periods so access will depend on the plan rules that an investor chooses

Inflation
The rate of increase in the cost of living, as measured by the Retail Price Index, that also has the effect of reducing the purchasing power of your money i.e £1000 today would buy less then a £1000 two years ago. This has to be considered when investing money. If an account offers a 4% return after tax but inflation is 4%, the net effect is a zero return on the value of your money. To protect against this effect some accounts offer index linking where the return is guaranteed to be a certain amount above inflation (i.e National Savings certificates).

Initial Interest
This figure is usually shown on the mortgage completion statement and refers to the amount of interest charged from the date that the funds are drawn down to the first repayment date. This has the effect of increasing the first mortgage payment and the amount of the initial interest payable will depend on the time in the month when the mortgage is completed. For example, if the mortgage payment is due on the 1st of the month and the mortgage is completed on 18th June then the first monthly mortgage payment will become due on 1st August. That monthly payment will, however, include one months' interest from 1st July - 1st August and also 13 days interest from 18th June - 30th June which represents the initial interest.

Inland Revenue
Government department responsible for assessment and collection of direct taxation on items such as income, capital gains, stamp duties, inheritance etc.

Instant Access
An account that allows withdrawals to be made at anytime, without having to give any prior warning or notice and without incurring any charge or interest penalty.

Insurance Guarantee premium
(See Mortgage Indemnity Premium)

Interest Only Mortgage
Interest only mortgages have become increasingly popular in recent years. Interest only mortgages can be supported by an endowment policy, pension plan or Pep in which case they are normally referred to as an endowment, pension or Pep mortgage. An interest only mortgage may, however, be arranged without the support of any particular repayment vehicle. Many lenders will now accept payment of interest only on the basis that the borrower makes their own arrangements to repay the capital at or before the end of the mortgage term. This could be done in a number of ways such as inheritance, sale of the property or from the realisation of other assets.

Interest Rate
The amount paid on the money deposited or the price paid for borrowing money. The way it is debited or credited will vary but the rate will usually be linked directly or indirectly to base rates.

International money order
It is very similar in many aspects to a regular money order except that it can be used to make payments abroad. With it, a buyer can easily pay a seller for goods or services if he or she resides in another country. International money orders are often issued by a buyer's bank and bought in the currency that the seller accepts. International money orders are thought to be safer than sending currency through the post because there are various forms of identification required to cash an international money order, often including a signature and a form of photo identification.
When purchasing an international money order, it is important to ensure that the specific type of money order is acceptable in the destination country. Several countries are very strict that the money order be on pink and yellow paper and have the words "international postal money order." In particular, the Japan Post (one of the largest banking institutions in the world) requires these features. Most other countries have taken this as a standard when there is any doubt of a document's authenticity.

Investment limit
The maximum amount that can be credited to an individual account. Usually if the limit is shown as £250,000 for example, this would be per person so that a joint account could attract up to £500,000.However this may not be the case for limited issue accounts.

Investor's Compensation Scheme
This scheme is devised to protect private investors from loss as a result of the collapse of an investment company. The scheme provides a maximum level protection of 90% of the total invested in most types of share and deposit accounts in a society up to £20,000 or the sterling equivalent of 22,222 Euro, whichever is the higher. In the case of joint accounts the protection applies to each individual, i.e. a maximum of 90% of £20,000 each.

ISA - Individual Saving Account
Came into effect on 6th April 1999 and will run for at least 10 years offering some certainty for those seeking long term savings. The main features are that up to £7000 pa can be invested of which £3000 can go into cash, £1000 into life assurance and £1000 into Stocks and Shares. If desired the whole balance can be put into shares, unit trusts or investment trusts. The plan is completely free of tax with no lock in or minimum subscription term and no lifetime limit to the total balance that can be built up. This account replaces the existing TESSA and PEP accounts.