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                                                                    Exhibit 10.4

DRAFT: 25/02/03

THIS SECOND START-UP LOAN AGREEMENT is made on [6th March], 2003

BETWEEN:

(1)  PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
     limited company incorporated in England and Wales, whose registered office
     is at Blackwell House, Guildhall Yard, London EC2V 5AE (in its capacity as
     Funding 1);

(2)  HALIFAX plc (registered number 02367076), a public limited company
     incorporated under the laws of England and Wales whose registered office is
     at Trinity Road, Halifax, West Yorkshire HX1 2RG (in its capacity as Second
     Start-up Loan Provider); and

(3)  STATE STREET BANK AND TRUST COMPANY a Massachusetts trust company organised
     under the laws of the Commonwealth of Massachusetts of the United States of
     America acting through its office at 225 Franklin Street, Boston,
     Massachusetts 02110 (acting as a co-trustee in its capacity as Security
     Trustee); and

(4)  U.S. BANK NATIONAL ASSOCIATION, a national banking association formed under
     the laws of the United States of America, acting through its office at 1
     Federal Street, 3rd Floor, Boston, Massachusetts 02110 (acting as a
     co-trustee in its capacity as Security Trustee).

IT IS HEREBY AGREED as follows:

1.   DEFINITIONS AND INTERPRETATION

     The Amended and Restated Master Definitions and Construction Schedule,
     signed for the purposes of identification by Allen & Overy and Sidley
     Austin Brown & Wood on [5th March], 2003 (as the same may be amended,
     varied or supplemented from time to time with the consent of the parties
     hereto) are expressly and specifically incorporated into this Agreement
     and, accordingly, the expressions defined in the Amended and Restated
     Master Definitions and Construction Schedule (as so amended, varied or
     supplemented) shall, except where the context otherwise requires and save
     where otherwise defined herein, have the same meanings in this Agreement,
     including the Recitals hereto and this Agreement shall be construed in
     accordance with the interpretation provisions set out in CLAUSE 2 of that
     Amended and Restated Master Definitions and Construction Schedule.

2.   THE FACILITY

     The Second Start-up Loan Provider grants to Funding 1 simultaneously with
     the issue by the Second Issuer of the Second Issuer Notes on the Second
     Issuer Closing Date and upon the terms and subject to the conditions
     hereof, a sterling loan facility in an aggregate amount of up to Pound
     Sterling[52,409,278.89] ([fifty two million, four hundred and nine
     thousand, two hundred and seventy eight pounds sterling and eighty nine
     pence]) available by way of two tranches (the amount so granted or such
     part of such amount as shall be outstanding from time to time being
     referred to as the "ADVANCE") as follows:

     (a)  a tranche in the sum of Pound Sterling (o) for the purposes of
          increasing the amount of the Reserve Fund which shall be paid into the
          Funding 1 GIC Account; and

     (b)  a tranche in the sum of up to Pound Sterling (o) for the purposes of
          providing funding for fees, costs and expenses incurred by or on
          behalf of Funding 1 in respect of increasing the

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          Funding 1 Share of the Trust Property and in respect of amounts
          payable by Funding 1 under the Second Issuer Intercompany Loan in
          relation to the issue of the Second Issuer Notes which shall be paid
          into the Funding 1 Transaction Account.

3.   INTEREST

3.1  The Advance and any interest capitalised pursuant to CLAUSE 3.4 will bear
     interest from (and including) the Second Issuer Closing Date until the
     Advance (and all accrued interest thereon) is repaid in full at a rate of
     LIBOR for three-month sterling deposits plus (i) until the Funding 1
     Interest Payment Date ending in [December 2008], a margin of 0.25 per cent.
     per annum and (ii) from the Funding 1 Interest Payment Date in [December
     2008], a margin of 0.50 per cent. per annum.

3.2  Subject to CLAUSES 6.2 and 6.3, interest on the Advance and any interest
     capitalised pursuant to CLAUSE 3.4 will be payable in arrear on each
     Funding 1 Interest Payment Date in accordance with the Funding 1 Priority
     of Payments.

3.3  Interest shall be calculated by reference to any Interest Period on the
     basis of the actual number of days elapsed and a 365 day year.

3.4  Any interest accrued in respect of an Interest Period but not paid on the
     Funding 1 Interest Payment Date relating thereto shall be capitalised
     forthwith.

4.   REPAYMENT

4.1  Funding 1 shall make repayments of all or any part of the Advance
     (including any interest capitalised pursuant to CLAUSE 3.4) on each Funding
     1 Interest Payment Date if, and to the extent that, there are Funding 1
     Available Revenue Receipts available therefor after making the payments and
     provisions referred to in paragraphs (a) to (n) of the Funding 1
     Pre-Enforcement Revenue Priority of Payments, until the Advance (including
     any interest capitalised pursuant to CLAUSE 3.4) and any accrued but unpaid
     interest thereon has been fully repaid.

4.2  The Cash Manager is responsible, pursuant to the Cash Management Agreement,
     for determining the amount of Funding 1 Available Revenue Receipts as at
     the fourth Business Day prior to each Funding 1 Interest Payment Date and
     each determination so made shall (in the absence of negligence, wilful
     default, bad faith or manifest error) be final and binding on the Second
     Start-up Loan Provider.

4.3  Subject to CLAUSES 5, 6.2, 6.3 and 7.2, on any Funding 1 Interest Payment
     Date on which all the Intercompany Loans have been repaid in full, Funding
     1 shall immediately repay the Advance (including any interest capitalised
     pursuant to CLAUSE 3.4) and pay any accrued but unpaid interest thereon.

4.4  The Second Start-up Loan Provider hereby acknowledges that on 14th June,
     2002 Funding 1 entered into the First Start-up Loan Agreement with the
     First Start-up Loan Provider, that from time to time Funding 1 may enter
     into New Start-up Loan Agreements with New Start-up Loan Providers and that
     the obligation of Funding 1 to repay the First Start-up Loan, this Second
     Start-up Loan and any New Start-up Loan will at all times rank pari passu
     and the First Start-up Loan, this Second Start-up Loan and any New Start-up
     Loan will be paid pro rata between themselves. The Second Start-up Loan
     Provider further acknowledges that the

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     Funding 1 Pre-Enforcement Revenue Priority of Payments and the Funding 1
     Post-Enforcement Priority of Payments set out in PARTS I and III of
     SCHEDULE 3 to the Funding 1 Deed of Charge respectively will be amended to
     reflect the entry by Funding 1 into this Second Start-up Loan Agreement and
     any New Start-up Loan Agreements and related agreements from time to time
     and agrees to execute such documents as are necessary or required by the
     Security Trustee for the purpose of including the Second Start-up Loan
     Provider and any New Start-up Loan Provider and the Second Issuer and any
     New Issuer (and any other relevant party) in the Transaction Documents to
     effect those amendments.

5.   ACCELERATION

     If any Intercompany Loan Acceleration Notice is served, this facility shall
     be cancelled and the Advance (including any interest capitalised pursuant
     to CLAUSE 3.4) and any accrued and unpaid interest shall, subject to the
     Funding 1 Deed of Charge, become immediately due and payable.

6.   PAYMENTS AND LIMITED RECOURSE

6.1  All payments to be made hereunder by Funding 1 shall be made in sterling in
     immediately available cleared funds to the Second Start-up Loan Provider's
     account (sort code [11-99-06], account number [o], account name: [Halifax
     CHAPS Funding]) (or such other account as the Second Start-up Loan Provider
     may have specified in writing to Funding 1 for this purpose). If any sum
     falls due hereunder otherwise than on a Business Day, it shall be paid on
     the next succeeding Business Day.

6.2  Prior to service of any Intercompany Loan Acceleration Notice or repayment
     in full of all the Intercompany Loans, amounts of principal, interest and
     any other amounts due hereunder shall be paid only in accordance with
     CLAUSE 7.3 and PART I of SCHEDULE 3 of the Funding 1 Deed of Charge.

6.3  If, upon the Advance becoming due and payable pursuant to CLAUSE 4.3 or 5,
     Funding 1 has insufficient funds available to meet its obligations
     hereunder in full on such date then:

     (a)  Funding 1 shall utilise its funds on such date to the extent available
          in making payments to the Second Start-up Loan Provider to repay the
          Advance (including any interest capitalised pursuant to CLAUSE 3.4)
          and accrued and unpaid interest thereon; and

     (b)  the obligations of Funding 1 to pay the shortfall together with any
          amounts falling due and payable thereafter shall on any day be limited
          to the available funds acquired by Funding 1 subsequent to such date,
          together with the proceeds of the enforcement of the security, paid to
          the Second Start-up Loan Provider pursuant to CLAUSE 8 of the Funding
          1 Deed of Charge,

     provided that the Second Start-up Loan Provider shall not release Funding 1
     from Funding 1's obligation to pay the remaining amount that would have
     been due under this Agreement had this CLAUSE 6.3 not applied and subject
     to the Funding 1 Post-Enforcement Priority of Payments.

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7.   SUBORDINATION AND SECURITY

7.1  The parties hereby agree that the Advance shall be subordinated to, inter
     alia, payments of principal and interest on any Intercompany Loan, and all
     other payments or provisions ranking in priority to payments to be made to
     the Second Start-up Loan Provider under this Agreement, in each case in
     accordance with the priority of payments or as provided in CLAUSE 8 and
     SCHEDULE 3 of the Funding 1 Deed of Charge.

7.2  The Second Start-up Loan Provider further agrees that, without prejudice to
     CLAUSE 8 of the Funding 1 Deed of Charge, its rights against Funding 1
     under this Agreement are limited to the extent that Funding 1 has
     sufficient assets to meet its claims or any part thereof having taken into
     account all other liabilities, both actual and contingent, of Funding 1
     which pursuant to the Funding 1 Deed of Charge rank pari passu with or in
     priority to its liabilities to the Second Start-up Loan Provider under this
     Agreement and so that Funding 1 shall not be obliged to make any payment to
     the Second Start-up Loan Provider hereunder if and to the extent that the
     making of such payment would cause Funding 1 to be or become unable to pay
     its debts within the meaning of Section 123 of the Insolvency Act 1986.
     However, if there are sufficient Funding 1 Available Revenue Receipts
     available and the Second Issuer does not repay the Advance when due in
     accordance with the terms hereof, such non-repayment will constitute an
     event of default under this Second Start-up Loan Agreement.

7.3  Funding 1 undertakes that its obligations to the Second Start-up Loan
     Provider hereunder shall at all times be secured by the Funding 1 Deed of
     Charge.

7.4  The Second Start-up Loan Provider hereby undertakes to be bound by the
     terms of the Funding 1 Deed of Charge and the Cash Management Agreement and
     in particular acknowledges that all of Funding 1's right, title, benefit
     and interest in this Agreement has been assigned to the Security Trustee
     under the Funding 1 Deed of Charge and agrees that on enforcement of the
     security created by the Funding 1 Deed of Charge, all amounts of principal,
     interest and any other amounts due hereunder shall rank in the order of
     priority set out in Funding 1 Post-Enforcement Priority of Payments.

7.5  The Second Start-up Loan Provider further covenants that, except as
     permitted under CLAUSE 9 of the Funding 1 Deed of Charge, it will not set
     off or claim to set off the Advance or any interest thereon or any part of
     either thereof against any liability owed by it to Funding 1.

7.6  The Second Start-up Loan Provider undertakes that it will not, prior to the
     second anniversary of the date on which any Notes are redeemed in full,
     take any corporate action or other steps or legal proceedings for the
     winding up, dissolution or reorganisation or for the appointment of a
     receiver, administrator, administrative receiver, trustee, liquidator,
     sequestrator or similar officer of Funding 1 or of any or all of the
     revenues and assets of Funding 1 nor participate in any ex parte
     proceedings nor seek to enforce any judgment against Funding 1, except as
     permitted under the provisions of the Funding 1 Deed of Charge.

8.   NOTICES

     Any notices to be given pursuant to this Agreement or to any of the parties
     hereto shall be sufficiently served if sent by prepaid first class post or
     by facsimile transmission and shall be deemed to be given (in the case of
     facsimile transmission) when despatched, (where delivered by hand) on the
     day of delivery if delivered before 17.00 hours on a London

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     Business Day or on the next London Business Day if delivered thereafter or
     (in the case of first class post) when it would be received in the ordinary
     course of the post and shall be sent:

     (a)  in the case of Funding 1, to Permanent Funding (No. 1) Limited,
          Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile number +44
          (020) 7556 0975) for the attention of the Secretary with a copy to
          HBOS Treasury Services plc, 33 Old Broad Street, London EC2N 1HZ
          (facsimile number +44 (020) 7574 8784) for the attention of Head of
          Capital Markets and Securitisation;

     (b)  in the case of the Second Start-up Loan Provider, to Halifax plc,
          Trinity Road, Halifax, West Yorkshire HX1 2RG (facsimile number +44
          (0) 1422 391777) for the attention of Mortgage Securitisation Manager,
          with a copy to HBOS Treasury Services plc, 33 Old Broad Street, London
          EC2N 1HZ (facsimile number +44 (020) 7574 8784) for the attention of
          Head of Capital Markets and Securitisation; and

     (c)  in the case of the Security Trustee, to State Street Bank and Trust
          Company at 225 Franklin Street, Boston, Massachusetts 02110,
          (facsimile number + 1 (617) 662 2919) for the attention of Mark Nelson
          and to U.S. Bank National Association at1 Federal Street, 3rd Floor,
          Boston, Massachusetts 02110, (facsimile number + 1 (617) 603 6638) for
          the attention of Corporate Trust Services,

     or to such other address or facsimile number as may from time to time be
     notified by any party to the other by written notice in accordance with the
     provisions of this CLAUSE 8.

9.   TAXES

9.1  All payments to be made by Funding 1 to the Second Start-up Loan Provider
     hereunder shall be made free and clear of and without deduction for or on
     account of Tax unless Funding 1 is required by law to make such a payment
     subject to the deduction or withholding of Tax, in which case Funding 1
     shall promptly upon becoming aware thereof notify the Second Start-up Loan
     Provider of such obligation, and shall make such payments subject to such
     deduction or withholding of Tax which it is required to make.

9.2  If Funding 1 makes any payment hereunder in respect of which it is required
     to make any deduction or withholding, it shall pay the full amount required
     to be deducted or withheld to the relevant taxation or other authority
     within the time allowed for such payment under applicable law and shall
     deliver to the Second Start-up Loan Provider, within thirty days after such
     payment falls due to the applicable authority, any original receipt (or a
     certified copy thereof) issued by such authority evidencing such payment.

10.  REMEDIES AND WAIVERS

     No failure by the Second Start-up Loan Provider to exercise, nor any delay
     by the Second Start-up Loan Provider in exercising, any right or remedy
     hereunder shall operate as a waiver thereof, nor shall any single or
     partial exercise of any right or remedy prevent any further or other
     exercise thereof or the exercise of any other right or remedy. The rights
     and remedies herein provided are cumulative and not exclusive of any rights
     or remedies provided by law.

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11.  ASSIGNMENTS AND TRANSFER

11.1 Funding 1 (other than in respect of any assignment by way of security
     pursuant to the Funding 1 Deed of Charge) may not assign and/or transfer
     any of its rights and/or obligations under this Agreement.

11.2 If there is any change in the identity of the Security Trustee pursuant to
     the terms of the Funding 1 Deed of Charge, the Second Start-up Loan
     Provider and Funding 1 shall execute such documents and take such actions
     as the new Security Trustee and the outgoing Security Trustee (as the case
     may be) may reasonably require for the purpose of vesting in the new
     Security Trustee the rights and obligations of the outgoing Security
     Trustee and releasing the outgoing Security Trustee (as the case may be)
     from its future obligations under this Agreement.

12.  SECURITY TRUSTEE AS A PARTY

     The Security Trustee has agreed to become a party to this Agreement for the
     better preservation and enforcement of its rights under this Agreement but
     shall have no responsibility for any of the obligations of, nor assume any
     liabilities to, the Second Start-up Loan Provider or to Funding 1
     hereunder.

13.  NO PARTNERSHIP

     Nothing in this Agreement (or in any of the arrangements contemplated
     hereby) shall, or shall be deemed to, constitute a partnership amongst the
     parties hereto.

14.  VARIATION

     No variation of this Agreement shall be effective unless it is in writing
     and signed by or on behalf of each of the parties hereto.

15.  INVALIDITY OF ANY PROVISION

     If any of the provisions of this Agreement becomes invalid, illegal or
     unenforceable in any respect under any law, the validity, legality and
     enforceability of the remaining provisions shall not in any way be affected
     or impaired thereby.

16.  COUNTERPARTS

     This Agreement may be executed in any number of counterparts, and by the
     parties on separate counterparts, but shall not be effective until each
     party has executed at least one counterpart. Each counterpart shall
     constitute an original of this Agreement, but all the counterparts shall
     together constitute but one and the same instrument.

17.  EXCLUSION OF THIRD PARTY RIGHTS

     A person who is not a party to this Agreement has no right under the
     Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
     Agreement, but this does not affect any right or remedy of a third party
     which exists or is available apart from that Act.

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18.  GOVERNING LAW

     This Agreement shall be governed by, and construed in accordance with, the
     laws of England.

19.  SUBMISSION TO JURISDICTION

     Each party to this Agreement hereby irrevocably submits to the
     non-exclusive jurisdiction of the English courts in any action or
     proceeding arising out of or relating to this Agreement, and hereby
     irrevocably agrees that all claims in respect of such action or proceeding
     may be heard and determined by such courts. Each party to this Agreement
     hereby irrevocably waives, to the fullest extent it may possibly do so, any
     defence or claim that the English courts are an inconvenient forum for the
     maintenance or hearing of such action or proceeding.

IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
first mentioned above.

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                                   SIGNATORIES

SIGNED by                                                )
for and on behalf of                                     )
PERMANENT FUNDING (NO. 1) LIMITED                        )


SIGNED by                                                )
for and on behalf of                                     )
HALIFAX plc


SIGNED by                                                )
for and on behalf of                                     )
STATE STREET BANK AND TRUST COMPANY                      )
                                                         )

SIGNED by                                                )
for and on behalf of                                     )
U.S. BANK NATIONAL ASSOCIATION                           )

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                             DATED [6TH MARCH], 2003





                        PERMANENT FUNDING (NO. 1) LIMITED
                                  as Funding 1


                                       and


                                   HALIFAX plc
                        as Second Start-up Loan Provider


                                       and


                       STATE STREET BANK AND TRUST COMPANY

                                       and


                         U.S. BANK NATIONAL ASSOCIATION

                               as Security Trustee






                         ______________________________

                         SECOND START-UP LOAN AGREEMENT
                         ______________________________








                                  ALLEN & OVERY
                                     London
                                  ICM:638827.4

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                                    CONTENTS

CLAUSE                                                                      PAGE
------                                                                      ----
1.   Definitions and Interpretation.......................................... 1
2.   The Facility............................................................ 1
3.   Interest................................................................ 2
4.   Repayment............................................................... 2
5.   Acceleration............................................................ 3
6.   Payments and Limited Recourse........................................... 3
7.   Subordination and Security.............................................. 4
8.   Notices................................................................. 4
9.   Taxes................................................................... 5
10.  Remedies and Waivers.................................................... 5
11.  Assignments and Transfer................................................ 6
12.  Security Trustee as a Party............................................. 6
13.  No Partnership.......................................................... 6
14.  Variation............................................................... 6
15.  Invalidity of any Provision............................................. 6
16.  Counterparts............................................................ 6
17.  Exclusion of Third Party Rights......................................... 6
18.  Governing Law........................................................... 7
19.  Submission to Jurisdiction.............................................. 7

SIGNATORIES.................................................................. 8