AVC
Additional voluntary contribution-an extra pension contribution that you make as a member of occupational pension scheme.

Acceptance letter
An offer letter that contains all terms and conditions of life assurance.

Accidental Death Benefit

Provides extra benefits if death occurs due to accident and is added with life insurance policy.

ADD
Accidental death and dismemberment-death or loss of any body part in an accident.

Accrual rate
Rate where there is an increment in pension benefits, for every year in the service .

Act of God
Mishappening or accidents occur due to natural calamity which no one can predict before.

Additional Borrowing
Additional money borrowed over your previous borrow money.

Annual Percentage Rate
The rate which takes into consideration all costs, interest charges and arrangement fees so that you can compare your credit facilities.

Annuity
The series of payments that you get after your retirement, in exchange of your pension fund that you have made while you were working.

Arrangement fee
Fees charged by the lender, while he is arranging your credit facilities.

Arrears

When a borrower does not make mortgage payment on time or he makes the wrong payment, is said to be in arrears.

Base rate
Interest rates set up bank of England , which describe borrowing and saving rate all over UK.

Basic State Pension
A fixed pension received by the people above the retirement age and is subjected to National Insurance Contribution Conditions. It's not related with earnings.

Benefits
The amount that is paid to assignee or claimant. It comes under the term of insurance policy.

Bridging Loan
At times there are two house transaction buying and selling. It's beneficial for you if both the deal take place simultaneously. However if it does not happen and you first purchase the property, before selling the second one. Then loan that you will require to purchase property is called bridging loan. it helps in filling up the gap between the two transactions. It is usually taken to compensate temporary cash shortfall.

Broker
He acts as an intermediary, bringing two parties together and helps them to enter into a deal but he is not made part of their agreement.

Building Society
It's a financial institution which helps its member to buy their own homes, after paying interest on deposits and lends them money to do so.

Capital
Capital is the cash required to generate income by investing it and it becomes a debt when you borrow it.

CCA
Consumer credit act- rules set by UK legislation, on the basis of which banks and different lenders lend money to the UK people.

CCJ

County-court judgments. If you fail to turn up before the court on the summoned day or you lose the case over your debt issue.

Certificated share
It's a share certificate given, that you are eligible to vote at annual general meetings.

CML
Council of mortgage lenders-an organization consisted of major banks and other building society .

Commission
An amount given to intermediaries by a financial institution for commencing a business .

Consolidation Loan
A loan that can consolidate all your debts into one single payment.

Credit Search
An inquiry made by the lenders with the help of Specialist Company to check your credit record.

Credit Rating
A rating given by the lender over your credit history whether you have a good credit or poor credit score.

Death Benefit
An insurance policy based upon the death of the insured person. His family receives his insurance amount after his death.

Deposit Account
An account which lies with banks or building society, you receive a variable rate of interest in your account .A high rate of interest can also be availed in those accounts which don't have easy access of money.

Depreciation
A constant use of your property (such as home or car) leads to some wear and tear and it looses its price value or there is a decrease in its value.

Disclosure
The duty assigned to insurance person, to aware the insurer about all the important information regarding insurance policy.

Fixed-rate mortgage
The fixed interest rate that you pay on your mortgage, for a specific period of time.

Flexible loan
A loan that gives you a freedom to borrow money so that you can increase or decrease the loan amount depending on your requirement of money.

Flexible mortgage
Mortgages based upon an agreement where you can increase or decrease the mortgage or stop the payment temporarily; depending upon on your present circumstances.

Fixed Rate
For a specific period rates are fixed.

FSA
Financial service industry in UK , which sets the rules for financial companies operation and looks after public interest, the only regulatory authority in UK.

Guaranteed growth bonds
A fixed period of investment, generally between 3 to 5 years, where a huge amount is invested with this guarantee either you will get minimum amount of money at the end or you won't lose original amount of investment.

HP
Hire purchase- an item is hired which you want to buy for a particular time and in return you pay monthly installments and interest for that item.

Illustration
An estimation of the returns received from investment, depending on specific growth rate. It also takes into consideration extra charges or fees which you might have to pay .

In Arrears
Money which belongs to you but not paid in time.

Indemnity policy
A type of home insurance that covers second hand value of your property.

IFA
Independent financial adviser who has the right to sell or give suggestions on the policies offered by insurance companies or other financial providers such as banks and building societies.

Individual Savings Account
A kind of saving or investment account, which does not include income and capital gains tax and can be used to invest in shares or stocks.

Intermediary
A person or organization responsible to offer advice for clients. It also arranges policies for them.

Interest
An amount that is charged to borrow a lump some money.

Interest-free Credit
A type of credit offered by stores where you pay for your purchases in equal instalments over a set period of time, usually 6 to 12 months, and on which no interest is added.

Interest-only mortgage
Credits offered by stores where no interest is included and you pay for your item in equal installments for a particular time say 6 to 12 months.

Lease
A mutual deal where the owner of any property (building, car, machinery etc) allows the second person to use his asset, but charges rent for using.

LTV
Loan to value- a mortgage amount expressed in percentage, of the property's value or what you have paid for the property.

Lump Sum
An amount that is paid all at one single payment rather than paying or receiving in monthly installments.

Maxi ISA
A tax-free saving account, where your investment can go up to £7000 every year with no tax. It entirely depends on you whether you want to invest the entire amount in shares and stocks or up to£3000 in cash savings while £1000 in life insurance investments.

Mini ISA
A tax-free saving account, where you can invest up to£3000 each year on cash saving or shares and stocks. Or you can invest up to £1000 on life insurance investments.

Mortgage
A loan that is offered to buy a property. An interest rate is charged for that. All the mortgages are secured against a property. There are various types of mortgages such as car mortgage, home mortgage, buy to let mortgage etc.

Mortgage indemnity insurance
An extra payment made to the mortgage lender, if you are borrowing more than the actual value of your home, so that he can take out insurance.

National Savings
Account run by the government, which is tax free.

Negative Equity
As the value of your house is depreciated and it becomes useless for your mortgage.

Occupational Pension Scheme
A pension scheme made by the company's employer for its employees

Overdraft
Through your current account, you owe money to your bank.

Payment protection
It's an insurance cover which pays your monthly repayments on credit cards or loan, in case you have lost your job or you are too sick to work.

Pension Scheme
To make savings after your job or retirement.

Pension Transfer
Transferring your pension from one management company to another one or from one employer to another.

Pensioner
A person who has received an income from his pension scheme after retirement.

Personal Loan

A loan which you take for personal purpose with fixed rate of interest and repayment period.

Redemption penalty
The money you will be charged if you want to go for the lender or you want to pay a part of your mortgage deal somewhere at the time of initial low rate period.

Repossession
Lender repossesses your property or takes away ownership of the property, when you fail to pay him loan amount as per the set terms and conditions.

Secured loan

A loan which requires your property as collateral with lender and if you fail to pay him back, he captures your property and sell it to get his money back.

Standard variable rate
The standard interest rates charged by mortgage lenders. The rates keep on fluctuating due to rise and fall in bank of England base rate.

Title Deed
A legal document which gives identification about the owner of the property. Beside this a detail about the property and the land it's been built up.

Total Borrowing
A sum of total amount you have borrowed in your account.

Total Disability
You are unable to do your job or can't even manage your daily aspects of life.

Unsecured loan

A loan where no security is required but high rate of interest is charged with short repayment period.

Valuation
To value the worth of a property whether it's suitable for lending on mortgage or not. Done by professional surveyor.

This Financial Glossary is provided for assistance only. If you are in any doubt about a financial term, you should seek independent financial advice.