IFA Jargon Buster

The world of finance can be confusing. If you're unsure of some technical terms, explore our handy jargon buster to see the definition.

A mortgage for individuals who buy property with the intention of then letting it out. The Financial Conduct Authority does not regulate some forms of 'buy to let' mortgage arrangements.

This insurance covers the cost of rebuilding or repairing the structure of a property. Lenders insist on you having adequate buildings insurance before they will give you a mortgage. With leasehold properties, it is normally the freeholder's responsibility to arrange buildings insurance.

This is combined insurance covering both a building and its contents. This may be cheaper than having one policy for the buildings insurance and a separate policy for the contents.

An extra payment that may be added to the funds accumulated in a 'With Profits' pension, endowment or investment policy. The 'bonus' amount added depends on the profits made by the respective insurance/investment company in any one year, or over a period of years. The most common are described as either 'reversionary' (annual bonus) or 'terminal' (final bonus).

A form of investment offered by an institution, such as a building society, insurance/investment company or the Government. Its purpose is to raise capital; the sum borrowed is then repaid with interest at maturity. Bonds can be bought and sold on the stock market. N.B. Not to be confused with an 'Insurance Bond'.

This is the difference between the price at which you buy units from / sell back units to an investment manager operating a unit trust.

This is the price at which you sell units in a unit trust back to the investment manager.

These are points at which benefits are paid out to you from a pension plan in the UK. An individual can have several during their lives and they often take place pre-retirement; HMRC has identified twelve different events. These include: the need to take a lump sum in the event of ill health; purchasing a lifetime annuity; and, the paying of death benefits. BCEs ensure the lifetime allowance is applied to all an individual's benefits.

The flat rate pension paid by the Government to an individual when they reach 'state pension' age: this is currently 65 for men and is rising to 65 for women by November 2018. To be eligible, you need to have paid sufficient National Insurance contributions during your working life.

The interest rate set by the Bank of England which other banks use to set their rates. When the 'base rate' changes, lenders usually follow by adjusting their Standard Variable Rate.

A method of transferring funds from one bank account to another.