FAQs & Glossary

What does it all mean

We understand the sheer volume of financial information and buzzwords on many sites can seem overwhelming, all you want to do is find the right product, the right solution and someone to explain all this in plain old English!

Let our friendly advisors help you through this process. They will on your behalf find the most appropriate products to meet your requirements and explain the advantages and disadvantages ( if any ) to you in a clear and concise way so that you can make an informed decision.

What service do GHL Direct provide

Here at GHL Direct our advisors will endeavour to provide you with the solution to any of your financial issues. We understand the current economic climate and what that means to your finances, with so many products on offer it can get confusing. Financial decision making is inevitably confusing and time consuming in this day when time is at a premium. Here at GHL Direct you can complete our no obligation product enquiry or leave it completely in our hands by contacting your local qualified financial adviser without obligation.

We look forward to meeting you and offering the kind of service that you have always wanted but seldom found.

How do I contact a Financial Adviser?

It's very easy and very quick, whats more there is absolutley no obligation, we wont call you unless you ask us to. You can contact an adviser via the advisor search pages, just type in your postcode, click through to your local advisor, review their profile & if required complete the quick enquiry form.

When can I expect a response from an advisor?

Our advisors will be sent a copy of your enquiry the moment you submit the form, if you have selected a contact date and time from the calendar they will where possible call at that time, should you need to speak to an advisor before that please call 0845 3700 172 during office hours.

Do I have to use your Financial Adviser?

We certainly hope our advisers can provide you with all the information your require to move forward but there is absolutley no obligation to use the GHL Direct adviser that we put you in contact with.

I have a complaint about the Financial Adviser?

At GHL Direct we pride oursleves on customer service and treating customers fairly, all advisors are regulated by the Financial Conduct Authority[FCA], we hope this gives you some confidence when dealing with our company. If you have any feedback about the services you have received good or bad please do let us know in the first instance using our online form or to speak to head office please call 0845 3700 172.

A

ACCRUAL RATE
The rate at which your pension benefits build up as pensionable service is completed in a Final Salary Scheme.
AER (ANNUAL EQUIVALENT RATE)
The interest paid from current, deposit or savings accounts.
ANNUITY
A contract you buy from an insurance company, using the lump sum of money such as the proceeds of your pension fund, to guarantee you an annual income for life or for a period of time [e.g. ten years].
APR (ANNUAL PERCENTAGE RATE)
In relation to mortgages, APR represents the total annual cost of borrowing by taking into account all costs associated with the loan: for example, interest, legal and valuation fees. By law, all lenders must show the APR alongside their quoted interest rates, to allow borrowers to compare the true cost of borrowing between other lenders in the market place. In relation to borrowing money on a credit card or from a bank, or when you make any purchase on credit, APR is the interest rate at which you are charged over a full year on the balance you owe.
ARRANGEMENT FEES
A charge made by some providers to arrange your loan, to cover things like administration and management fees.
AVCs (ADDITIONAL VOLUNTARY CONTRIBUTIONS)
Extra payments you can make to your main occupational pension scheme, over and above your regular contributions, to boost your retirement benefits. AVCs can be paid either to your employers scheme or to a separate arrangement. See also FSAVCs.

B

BACS (BANKERS AUTOMATED CLEARING SYSTEM)
A method of transferring funds from one bank account to another.
BASE RATE
The interest rate set by the Bank of England which other banks use to set their rates. When this rate changes, other lenders usually follow by adjusting their Standard Variable Rate.
BASIC STATE PENSION
The single person's flat rate state pension paid when you reach state pension age [60 for women, 65 for men – although these are set to increase to 65 for women by 2020]. To qualify you have to have paid enough National insurance contributions during your working life.
BID PRICE
The price at which you sell units in a unit trust back to the investment manager.
BID-OFFER SPREAD
The difference between the prices at which you buy and sell back units in a unit trust.
BOND
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 repaid with interest at maturity. Bonds can be bought and sold on the stock market.
BONUS
An extra payment that may be added to the funds accumulated in a with profits pension, endowment or investment policy. The amount of bonus depends on the profits the insurance/investment company makes in any one year, or over a period of years. Bonuses are normally either ‘reversionary' for the annual bonus or ‘terminal' for the final bonus.
BRIDGING LOAN
A short-term, high interest loan used in house purchase to bridge the gap between the date on which you have to pay for your new home and the date you receive money from the sale of your old home.
BUY TO LET MORTGAGE
A mortgage for people who buy property and intend to let it out. The Financial Conduct Authority does not regulate some forms of buy to lets.

C

CAPITAL GAINS TAX
The tax payable on profits made on the sale of assets or property other than your home.
CAPITAL REPAYMENT MORTGAGE
A mortgage in which monthly repayments consist of instalments of capital [the amount of money you have borrowed] as well as interest.
CAPPED RATE MORTGAGE
The interest rate charged by the lender never rises above a specified rate [the “capped rate”]. If the variable rate drops below the capped rate, you pay the variable rate.
CARRY BACK
A facility for members of personal pension schemes to have their annual contribution, or part of it, treated as being paid in the preceding tax year.
CARRY FORWARD
The facility for members of personal pension schemes to carry forward any unused tax relief from any of the six years prior to the year in which the contribution was to be paid. Carry forward of unused relief was abolished in April 2001.
CAT STANDARDS
Stands for [reasonable] Charges or Cost, [easy] Access and [fair] Terms. The CAT mark is awarded by the government to ISA's and mortgages which meet these standards.
CHAPS (CLEARING HOUSE AUTOMATED PAYMENT SYSTEM)
Provides same day transfer from one bank account to another.
CHARGE
With reference to house buying, the means by which lenders in England, Wales and Northern Ireland enforce their rights to a property. The charge is recorded at the land registry. A primary mortgage will normally be secured by a first charge.
COMMISSION
One method by which financial advisors or salespeople are paid by an insurance company for placing business with them.
COMPLETION
The point at which the legal formalities of a property purchase or a mortgage are finalised and the funds released by the lender.
CONTRACTING IN/OUT
The process by which you can elect to stay in or opt out of the State Second Pension [S2P], formerly known as the State Earnings Related Pension Scheme [SERPS].
CORPORATE BOND
A form of investment offered by a company in order to raise capital, in which the lump sum is repaid with interest at maturity. Corporate bonds can be bought and sold on the stock market.
CORPORATION TAX
A tax applying to limited liability companies only. It is charged on the company's profits.
CREDIT CHECK
An enquiry made on the credit history of an applicant, normally by reference to one of the major credit agencies.
CRITICAL ILLNESS INSURANCE
Pays you a lump sum if you are found to suffer from one of a range of designated illnesses [normally including cancer, heart attack and stroke among others]. When an illness requires you to stop working for some time, having insurance means worries are eased. So normal practice is to have enough insurance to cover your mortgage and provide income for a year or two if your savings or other insurance will not provide this.

D

DEATH AFTER RETIREMENT BENEFITS
The pension and lump sum paid to the deceased member's spouse and/or other dependents where death occurs after retirement.
DEATH IN SERVICE BENEFITS
The pension and lump sum paid to the deceased member's spouse and/or other dependents where death occurs while still working for an employer and before normal retirement date.
DEED OF COVENANT
An agreement in a deed to transfer income from one person to another in a tax efficient way.
DEFINED BENEFIT SCHEME
Also known as a Final Salary Scheme. This is the traditional form of company or occupational pension in which your pension is calculated as a proportion of your salary in the last few years of work. The proportion you receive depends upon how many years you have been in your company scheme.
DEFINED CONTRIBUTION SCHEME
Also known as a Money Purchase Scheme. A pension scheme where the amount of a member's retirement benefit depends on the amount of contributions paid into the scheme by or for the member. Either the employer or the policyholder decides the rate of contributions.
DISCOUNTED RATE
A guaranteed reduction on the lender's variable interest rate. It is usually only available for an agreed period of time, after which the interest rate reverts to the lender's variable rate. Early repayment charges may apply on these types of arrangements.
DISTRIBUTION
Payments made to investors of the income generated by an investment fund.
DIVIDEND
A distribution to shareholders of a portion of a limited company's profits. The amount of a dividend per share is decided by the company's board of directors and distributed in proportion to the number of shares held by each shareholder.

E

EARLY REPAYMENT CHARGE
If you borrow money and pay it back before it's due, the lender makes less money on the deal than expected. So to compensate, the lender can ask for an additional payment to cover administration costs should you repay [‘redeem'] the loan early. The redemption period varies according to the terms of your mortgage or other loan.
EPC [ Energy Performance Certificate]
An Energy Performance Certificates (EPC) tells you how to make your home more energy efficient and reduce carbon dioxide emissions. They contain information on your property's current energy use and carbon dioxide emissions as well as a report listing recommendations which will reduce them.
ENDOWMENT MORTGAGE
An endowment life assurance policy is often linked to a mortgage. Throughout the term of the mortgage, payments made by the borrower cover only the interest due on the loan. The capital sum borrowed is paid back in one lump sum at the end of the loan period, using the proceeds from an endowment policy taken out at the start of the mortgage.
ENDOWMENT POLICY
A life insurance and savings policy which pays a specified amount of money at the end of an agreed term, or on the death of the life assured. Often linked to a mortgage.
EQUITIES
The ordinary shares of a company.
EQUITY
The difference between the value of your property and the amount you actually borrowed. If your house is valued at £80,000 and you have a £60,000 mortgage, your equity is £20,000.
EXPRESSION OF WISH
A means by which you can indicate a preference as to who should receive any lump sum death benefit. The choice is not binding on trustees or administrators and thus Inheritance Tax is normally avoided. Also referred to as a nomination form.

F

FINAL SALARY SCHEME
Also known as Defined Benefit Scheme. This is the traditional form of company or occupational pension where your pension at retirement is calculated as a proportion of your salary in the last few years of work, with the proportion depending on how many years you have been in your company scheme.
FIXED RATE MORTGAGE
A mortgage in which the interest rate is fixed for an agreed period [usually from two to ten years] and it is unaffected by changes in the lender's variable rate. This means that during the specified period, you will know exactly how much your monthly repayments will be. At the end of this period, interest on the mortgage will be charged at the lender's variable rate. Early repayment charges may apply on these types of arrangements.
FLEXIBLE MORTGAGE
A mortgage in which you can vary the amount you pay each month and take breaks from your monthly payments.
FLEXIBLE PENSION PLAN
A pension product which allows you to vary the amount you pay each month and take breaks from your monthly payments.
FOOTSIE [FTSE 100]
The popular name for the Financial Times Stock Exchange 100, the main UK share index which represents the share prices of the top 100 public limited companies by value.
FSA
The Financial Conduct Authority, the main regulatory body for the UK financial services industry.
FSAVCs (FREE STANDING ADDITIONAL VOLUNTARY CONTRIBUTIONS)
Extra payments you can make into an individual pension plan, to run alongside your company pension scheme, to boost your pension fund. The plan is independent of your employer's main pension scheme.
FUND
General term for an investment vehicle which pools the money of investors and invests it according to a defined set of investment objectives.
FUND MANAGER
An investment professional who takes decisions on what to buy and sell on behalf of a fund's investors.
FUNDAMENTALS
The underlying economic factors such as industry output, wages, cost of materials and fluctuations in currency which affect a market, country or sector.
FUTURES
A contract to buy or sell a fixed amount of currencies, shares or commodities on a fixed date in the future at a fixed price.

G

GAZUMPING
Gazumping is where a seller agrees to accept your bid and then accepts a higher bid from someone else.
GILT (GILT EDGED SECURITY)
A fixed-interst bond or security issued by the UK government.
GOODWILL
Is the difference between the value of the separable net assets of a business and the total value of the business. Usually applied to intangible values such as a company's brands and the presumed tendency of customers to continue buying from the company.
GPP (GROUP PERSONAL PENSION)
An arrangement made by an employer for employees of that company to participate in a personal pension scheme on a group basis.

H-L

HEDGING
A strategy designed to offset the risk of an investment.

I

IFA (INDEPENDENT FINANCIAL ADVISER)
IFA's are completely independent and can recommend the products of any company.
IMRO INVESTMENT MANAGEMENT REGULATORY ORGANISATION
The body that regulates the management of unit trusts.
INCOME DRAWDOWN
A facility by which you can draw an income from your pension fund while keeping the rest fully invested. Under present rules you can do this until age 75, at which point you must use your remaining pension fund to buy an annuity.
INCOME TAX
Tax payable if you have income above the minimum level taxable in the UK.
INCREMENT
An increase in contributions, or an additional contribution, to a policy already in existence.
INDEX
A means of measuring movement in a set of statistics over a period of time, used as a benchmark by unit trust managers.
INDEX-LINKED
Payments protected against the effects of inflation by increasing in line with changes in the index of retail prices.
INFLATION
The amount, expressed as a percentage, by which prices rise or fall year on year.
INHERITANCE TAX (IHT)
Tax payable after you die on the value of your assets in excess of a certain threshold value. Certain gifts between husband and wife are exempt. IHT is also chargeable in certain circumstances while you are still alive.
INITIAL CHARGE
A charge levied by your investment manager to cover administration and sales commission when you invest in a fund.
INTEREST ONLY MORTGAGE
A mortgage in which repayments consist only of interest on the amount you have borrowed. At the end of the mortgage period you pay off the capital sum you borrowed, using a suitable repayment vehicle, such as an ISA, which you must set up at the outset of the mortgage.
INVESTMENT TRUST
A company, quoted on the Stock Exchange, which invests in other companies' shares.
ISAs (INDIVIDUAL SAVINGS ACCOUNTS)
Tax efficient savings plans which can hold cash, shares or life assurance, or a combination of all three. ISA's were introduced in 1999 to replace TESSAs and PEPs.

L

LOAN TO VALUE [LTV]
The size of a mortgage expressed as a percentage of the value of the property. For example, a £45,000 mortgage on a house valued at £50,000 gives an LTV of 90%.

M

MARKET CAPITALISATION
The value of a company measured by the total stock market price of its shares, calculated by multiplying the number of shares by the current share price.
MICROPAL STAR RATINGS
Micropal is an independent Mutual Fund analyst which monitors all the UK's unit trust and OEICs and awards stars on a scale of 0-5, with the highest scores going to the best performing funds.
MONEY PURCHASE SCHEME
Also known as Defined Contribution Scheme. A pension scheme in which a member's retirement benefits depends on the amount of contributions paid into the scheme by and/or for the member. The employer or policyholder decides the rate of the contributions.
MORTGAGE INDEMNITY GUARANTEE (MIG) FEE
If a bank or building society lends more than it's usual ‘loan to value' limit on a property, it may take out insurance to cover the risk of default. If it becomes necessary to repossess a property and the lender cannot recover the full amount of the original mortgage, the difference is covered by the insurance. The cost of the insurance is covered by the MIG fee, payable by the borrower.
MORTGAGE PAYMENT PROTECTION INSURANCE
Covers all or part of your monthly mortgage payment, plus an extra amount to cover mortgage related expenses, for up to 12 months should you lose your income through an accident, sickness or unemployment.
MUTUAL COMPANY
A company which has no shareholders but is owned instead by it's with profits policyholders.
MUTUAL FUND
An open-ended fund operated by an investment company, which raises money from shareholders and invests in a group of assets in accordance with a stated set of objectives. Shares are issued and redeemed on demand.

N - O

NASDAQ
The index of the leading technology stocks in the USA.
NATIONAL INSURANCE
Payments made out of earnings by employees, employers and the self-employed to the government. Paying National Insurance contributions (NIC's) entitles you to a state pension and other benefits.
NATIONAL INSURANCE REBATE
The amount by which employers and employees National Insurance contributions are reduced for employees who are contracted-out of SERPS (now replaced by S2P) and who join an occupational pension scheme. Alternatively, it is the payment made by the Department of Work and Pensions as minimum contributions to a personal pension scheme.
NEGATIVE EQUITY
If the market value of your house is less than the amount you owe on your mortgage, you are said to have negative equity.
NET YIELD
The return on an investment after tax has been deducted

O


OCCUPATIONAL PENSION SCHEME
A legal contract set up by an employer to provide pensions and/or other benefits for one or more employees on retirement, death or leaving pensionable service.
OEIC (OPEN ENDED INVESTMENT COMPANY)
A managed fund which holds a portfolio of investments which you can buy into. OEICs issue shares instead of units, and normally quote a single price for buying and selling.
OFFER PRICE
The price at which you buy units from a unit trust manager.
OFFSHORE FUNDS
Funds based outside the UK for tax purposes.
OMO OPEN MARKET OPTION
Your right at retirement to buy an annuity from a provider other than the one which administered your pension fund while you were working.
OPTION
In relation to a pension, the choice of how to take your fund [e.g. lump sum and pension, or pension only] and who to buy an annuity from. This can be from a provider other than the one which administered your pension fund while you were working. In relation to investment, a contract giving the right to buy or sell commodities, currencies or shares at a fixed date in the future at a fixed price.

P - Q

PAID UP PENSION (PUP)
A pension is paid up when no further contributions are expected.
PAYE PAY AS YOU EARN
The system by which income tax and National Insurance contributions are collected from your salary by your employer before it is paid to you, and passed to the Inland Revenue.
PENSION FORECAST
A service provided by the Department of Work and Pensions which tells you what your pension is worth.
PENSIONS OMBUDSMAN
An independent arbitrator for pension disputes with statutory powers to enforce his/her decisions.
PEP (PERSONAL EQUITY PLAN)
A tax efficient savings plan replaced by ISA's in 1999. You can no longer invest in a new PEP but you can still transfer your existing PEP into an ISA.
PERMANENT HEALTH INSURANCE
Insurance which replaces the income you might lose through long-term illness or injury. The amount you receive is related to your salary.
PERSONAL PENSION SCHEME
A pension scheme for those who are self-employed or, if employed, are not members of an occupational scheme.
PHASED RETIREMENT
The facility to use small segments of your pension to buy annuities as and when you need more income, rather than buying a single annuity using your entire pension fund.
PLC (PUBLIC LIMITED COMPANY)
A company in which anyone can buy shares and whose shares are available to buy and sell in a stock market. A PLC is owned by its shareholders.
PMI (PRIVATE MEDICAL INSURANCE)
Insurance to cover the cost of private medical treatment should you suffer one of the medical conditions specified in the policy.
PRICE/EARNINGS RATIO
Calculated by dividing the market price of a company's ordinary shares by it's earnings-per-share figure. It provides an indicator of the company's performance potential.

Q

QUARTILE
Most UK funds are grouped into sectors. For purposes of comparison, each sector is divided into four quartiles [or quarters]; the best performing funds are in the top quartile.

R - S

REDEMPTION
Paying off [redeeming] a mortgage, either at the end of the mortgage term or when you move to another property or switch to another lender.
RE-MORTGAGING
The process of switching your mortgage from one lender to another without actually moving home.
REPAYMENT MORTGAGE
Also known as a capital and interest mortgage. Your monthly repayments consist of instalments of capital (the amount of money you have borrowed) as well as interest due on the amount you borrowed.
RIGHTS ISSUE
New shares sold by a company to raise capital.
RISK
Refers to the fact that the value of your savings and investments can fall as well as rise. Some savings and investments (direct investment in equities, for example) carry greater risk than others (such as a deposit account with a bank or building society).
RPI RETAIL PRICE INDEX
The official measure of inflation in the UK. It measures the average change from month to month in the prices of goods and services purchased by a typical household.

S

S2P (STATE SECOND PENSION)
A state pension additional to the basic state pension based on earnings. Replaced by SERPS [State Earnings-Related Pension Scheme].
SCRIP ISSUE
The issue of new share certificates to existing shareholders to reflect an accumulation of profits on a company's balance sheet.
SECURITIES
The general name for stocks and shares.
SERPS (STATE EARNINGS RELATED PENSION SCHEME)
A state pension additional to the basic state pension and based on earnings. Now replaced by State Second Pension [S2P].
SHARES
If you own shares in a company you are a part owner of the company, entitled to vote at annual meetings and benefit from the company's profits. These are distributed in the form of a dividend.
SMALL CAPS
another name for small companies.
SSAS (SMALL SELF ADMINISTERED SCHEME)
An occupational pension scheme in which the members are trustees and are directly responsible for administering the fund and paying out the benefits. Some funds are invested in assets other than insurance premiums.
STAKEHOLDER PENSION
A low cost pension scheme introduced by the government in 2001 to encourage people to make provision for their financial future. Stakeholder pensions are aimed at those who may not have been able to afford a personal pension and were not eligible for an occupational or group scheme.
SURVEY
The most common purpose of a survey is to ensure that property is fit for mortgage lending. Your mortgage lender will require that you have at least a basic valuation report carried out. Other types of survey are designed to give an evaluation of the condition and value of a property. These cost more than the basic valuation report.
SWITCHING
Moving an investment out of one fund and into another.

T - U

TERM
The length of time over which a mortgage is to be paid.
TERM ASSURANCE
A life assurance contract with a fixed term. The sum assured is paid out only if the life assured dies within the term specified.
TESSA (TAX EXEMPT SPECIAL SAVINGS ACCOUNT)
Replaced by ISA's in 1999. You can no longer invest in a new TESSA but you can transfer your existing TESSA into an ISA.
TIED AGENT
A financial adviser who has an agreement with one particular company to recommend its products and only those products. Tied agents can range from self-employed individuals to banks and building societies; they can give advice on your financial circumstances but they cannot survey the whole market for you.
TOTAL RETURN
The combination of capital growth and reinvested income produced by an investment at the end of any given period.
TRANSFER VALUE
The amount of money available to be transferred from one pension arrangement to another.

U

UNIT LINKED POLICY
An insurance policy in which the benefits depend on the performance of units in a fund which invests in shares, bonds and property.
UNIT TRUST
An investment contract which invests in a variety of different stocks and shares and is divided into units which are issued to its members instead of shares.

V - Y

VALUATION
An independent check of a property by an approved surveyor to help a lender establish how much the property is worth and how much they are prepared to lend on it.
VARIABLE RATE
The interest rate that a lender charges on a loan or mortgage. It can go down as well as up, which ultimately means that your repayments can do the same.
VAT VALUE ADDED TAX
A form of indirect taxation levied on goods and services at the point of sale.
VOLATILITY
The degree by which share prices in a particular market or sector go up or down.

W

WHOLE LIFE POLICY
A life insurance policy which pays a specified amount on the death of the life assured.
WINDING UP
The legal termination of a pension scheme.
WITH PROFITS POLICY
A life insurance or pension policy which has annual bonuses added to the sum insured.

X

XD EX-DIVIDEND
The interval between the announcement and payment of the next dividend or, in the case of a unit trust, the next income distribution.

Y

YIELD
The annual dividend or income from an investment.

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