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                                                                     Exhibit 4.2
Draft: 25/02/03

THIS AMENDED AND RESTATED MORTGAGES TRUST DEED is made on [6th March], 2003
between:

(1)  HALIFAX PLC (registered number 2367076), 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 capacities as
     Seller, Beneficiary and Cash Manager;

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

(3)  PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116) a private
     limited company incorporated under the laws of Jersey whose registered
     office is at 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands, in
     its capacity as Mortgages Trustee; and

(4)  SFM OFFSHORE LIMITED (registered number 76015) a private limited company
     incorporated under the laws of Jersey whose registered office is at 47
     Esplanade, St Helier, Jersey JE1 0BD, Channel Islands, in its capacity as
     Share Trustee of the Mortgages Trustee.

WHEREAS:

(A)  The Mortgages Trust was constituted by the Share Trustee of the Mortgages
     Trustee in favour of Funding 1 and the Seller on the terms and subject to
     the conditions set out in the Mortgages Trust Deed dated 13th June, 2002
     (as amended and/or restated by this Deed and from time to time, the
     "MORTGAGES TRUST DEED").

(B)  The Mortgages Trustee holds the Trust Property as bare trustee for the
     Beneficiaries upon, with and subject to the trusts, powers and provisions
     of the Mortgages Trust Deed.

(C)  The Seller carries on the business of, inter alia, originating residential
     first mortgage loans to individual Borrowers in England and Wales and of
     managing and administering such mortgage loans. The Seller assigned the
     Initial Portfolio to the Mortgages Trustee on 14th June, 2002 and (from
     time to time) has assigned and may assign New Portfolios to the Mortgages
     Trustee, pursuant to the terms of the Mortgage Sale Agreement. The Initial
     Portfolio is, and any New Portfolios are and shall be, held by the
     Mortgages Trustee on trust for the Beneficiaries upon, with and subject to
     the trusts, powers and provisions of the Mortgages Trust Deed.

(D)  The parties to the Mortgages Trust Deed have agreed to amend and restate
     the terms of the Mortgages Trust Deed as set out herein.

NOW THIS DEED WITNESSES:

1.   DEFINITIONS AND CONSTRUCTION

1.1  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 varied or
     supplemented from time to time with the consent of the parties hereto) is
     expressly and specifically incorporated into this Agreement and,
     accordingly, the expressions defined in the Amended and Restated Master
     Definitions and


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     Construction Schedule (as so varied or supplemented) shall, except where
     the context otherwise requires and save where otherwise defined herein,
     have the same meanings in this Agreement.

1.2  This Deed amends and restates the Mortgage Trust Deed made on 13th June,
     2002 between the parties hereto (the "PRINCIPAL DEED"). As of the date of
     this Deed, any future rights or obligations (excluding such obligations
     accrued to the date of this Deed) of a party under the Principal Deed shall
     be extinguished and shall instead be governed by this Deed.

2.   CREATION OF MORTGAGES TRUST

2.1  INITIAL TRUST PROPERTY

     On 13th June, 2002 the Share Trustee of the Mortgages Trustee settled on
     trust the Initial Trust Property to be held on trust absolutely as to both
     capital and income by the Mortgages Trustee for the benefit, as tenants in
     common, of the Seller as to the Initial Seller Share Percentage and Funding
     1 as to the Initial Funding 1 Share Percentage.

2.2  INITIAL CLOSING TRUST PROPERTY

     Pursuant to the provisions of the Mortgage Sale Agreement, the Seller
     assigned the Initial Closing Trust Property to the Mortgages Trustee on the
     Initial Closing Date.

2.3  FUTURE TRUST PROPERTY

     From time to time and pursuant to the Mortgage Sale Agreement, the Seller
     has assigned and intends to assign the Future Trust Property to the
     Mortgages Trustee.

2.4  TRUST PROPERTY

     Subject to CLAUSE 3, the Mortgages Trustee shall hold the Trust Property as
     to both capital and income on trust absolutely for Funding 1 (as to the
     Funding 1 Share) and for the Seller (as to the Seller Share) as tenants in
     common upon, with and subject to all the trusts, powers and provisions of
     this Deed.

3.   CONDITIONS PRECEDENT

3.1  The Initial Trust Property is held by the Mortgages Trustee on the
     Mortgages Trust.

3.2  The Closing Trust Property shall be held by the Mortgages Trustee on the
     Mortgages Trust upon the satisfaction of the following conditions
     precedent:

     (a)  due execution and delivery of the Mortgage Sale Agreement as amended
          and restated by all parties to it;

     (b)  due execution and delivery of this Deed by all parties to it; and

     (c)  in respect of the Funding 1 Share of the Trust Property only, payment
          of the Purchase Price by Funding 1 to the Seller.

3.3  The Closing Trust Property and any Future Trust Property shall be held by
     the Mortgages Trustee on the Mortgages Trust subject to satisfaction of the
     conditions set out in CLAUSE 4.1



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     of the Mortgage Sale Agreement for the transfer of New Loans and their New
     Related Security to the Mortgages Trustee.

4.   ACQUISITION BY FUNDING 1 OF AN INCREASED INTEREST IN THE TRUST PROPERTY

4.1  OFFER TO PAY

     On not more than 60 days' written notice nor less than 20 days' written
     notice, Funding 1 may offer to make a payment to the Seller so as to
     increase Funding 1's share of the Trust Property and to cause a
     corresponding decrease in the Seller's share of the Trust Property on the
     Distribution Date specified in that notice. Such offer may only be made if
     the following conditions precedent are satisfied on such Distribution Date:

     (a)  no deficiency is recorded on the Principal Deficiency Ledger as at the
          most recent Funding 1 Interest Payment Date;

     (b)  no Note Event of Default or Intercompany Loan Event of Default shall
          have occurred which is continuing or unwaived as at the relevant
          Distribution Date;

     (c)  the Security Trustee is not aware that the increase in the Funding 1
          Share of the Trust Property (or the corresponding decrease in the
          Seller Share of the Trust Property) would adversely affect the then
          current credit ratings by the Rating Agencies (or any of them) of the
          Notes;

     (d)  the Notes have been issued by the relevant Issuer, the subscription
          proceeds received on behalf of the relevant Issuer and advanced by the
          relevant Issuer to Funding 1 pursuant to an Intercompany Loan
          Agreement, the proceeds of which will be applied by Funding 1 to make
          the payment referred to in the notice on the relevant Distribution
          Date;

     (e)  Funding 1 has entered into, if necessary, a New Start-up Loan and a
          New Funding 1 Swap and adjustments have been made, if required, to the
          Reserve Fund;

     (f)  receipt of a solvency certificate executed by an authorised signatory
          of the Seller in form and content acceptable to the Mortgages Trustee,
          Funding 1 and the Security Trustee;

     (g)  as at the relevant Distribution Date, the aggregate Outstanding
          Principal Balance of Loans constituting the Trust Property, in respect
          of which the aggregate amount in arrears is more than three times the
          monthly payment then due, is less than 5 per cent. of the aggregate
          Outstanding Principal Balance of all Loans constituting the Trust
          Property;

     (h)  the Seller has not received written notice that the short term,
          unsecured, unguaranteed and unsubordinated debt obligations of the
          Seller are not rated at least P-1 by Moody's, A-1 by Standard and
          Poor's and F1 by Fitch at the time of, and immediately following, the
          payment made by Funding 1 on the relevant Distribution Date;




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     (i)  the product of the WAFF and WALS for the Loans constituting the Trust
          Property calculated on the relevant Distribution Date in the same way
          as for the Initial Portfolio (or as agreed by the Servicer and the
          Rating Agencies from time to time) does not exceed the product of the
          WAFF and WALS for the Loans constituting the Trust Property calculated
          on the most recent previous Closing Date, plus 0.25 per cent.;

     (j)  the loan-to-value ratio of Loans in the Trust Property, after
          application of the LTV Test on the relevant Distribution Date, does
          not exceed the loan-to-value ratio (based on the LTV Test) of Loans in
          the Trust Property on the most recent previous Closing Date plus 0.25
          per cent.; and

     (k)  the Reserve Fund has not been debited on or before the relevant
          Distribution Date for the purposes of curing a Principal Deficiency in
          respect of the Term Advances in circumstances where the Reserve Fund
          has not been replenished by a corresponding amount by the relevant
          Distribution Date.

     Funding 1 may not offer to make a payment to the Seller in consideration of
     an increased share of the Trust Property if the option to redeem the Notes
     pursuant to CONDITION 5(D) of the Conditions of the First Issuer Notes is
     not exercised.

4.2  COMPLETION OF ASSIGNMENT

     If an offer is made by Funding 1 in accordance with CLAUSE 4.1 above and
     that offer is accepted by the Seller, Funding 1 shall, subject to
     satisfaction of the conditions precedent set out in CLAUSE 4.1 above, pay
     to the Seller an amount equal to the increase in the Funding 1 share of the
     Trust Property and the Funding 1 Share of the Trust Property shall increase
     by a corresponding amount, and the Seller Share of the Trust Property shall
     decrease by the same amount.

4.3  AUDIT OF LOANS CONSTITUTING THE TRUST PROPERTY

     If the short term, unsecured, unguaranteed and unsubordinated debt
     obligations of the Seller fall below A-1 by Standard & Poor's, P-1 by
     Moody's and/or F1 by Fitch, then the Beneficiaries shall appoint a firm of
     independent auditors (approved by the Rating Agencies) to determine whether
     the Loans and their Related Security (or any part of them) constituting the
     Trust Property complied with the representations and warranties set out in
     SCHEDULE 1 of the Mortgage Sale Agreement as at the date such Loans were
     assigned to the Mortgages Trustee. The costs of such independent auditors
     shall be borne by the Beneficiaries pro rata according to their respective
     current percentage shares in the Trust Property.

5.   INITIAL FUNDING 1 SHARE AND INITIAL SELLER SHARE

5.1  INITIAL FUNDING 1 SHARE

     The Initial Funding 1 Share of the Trust Property was (pound)35.00 as at
     13th June, 2002 and (pound)3,500,000,035 as at the Initial Closing Date.
     The Initial Funding 1 Share Percentage was the Initial Funding 1 Share
     expressed as a percentage of the Trust Property as at the Initial Closing
     Date, such percentage being 35 per cent.


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5.2  INITIAL SELLER SHARE

     The Initial Seller Share of the Trust Property was the total amount of the
     Trust Property minus the Initial Funding 1 Share as at 13th June, 2002. As
     at the Initial Closing Date, the Initial Seller Share was
     (pound)6,500,000,065 and the Initial Seller Share Percentage was equal to
     100 per cent. minus the Initial Funding 1 Share Percentage, such percentage
     being 65 per cent.

6.   ACQUISITION BY SELLER OF AN INTEREST RELATING TO CAPITALISED INTEREST

6.1  Any increase in the Outstanding Principal Balance of a Loan due to
     Capitalised Interest will be allocated to the Funding 1 Share of the Trust
     Property and to the Seller Share of the Trust Property, based on
     respectively the Funding 1 Share Percentage and the Seller Share Percentage
     in the Trust Property as calculated on the most recent Calculation Date.

6.2  Prior to an Insolvency Event occurring in respect of the Seller, on each
     Distribution Date the Seller shall make a cash payment to Funding 1 in an
     amount equal to Funding 1's share of the Capitalised Interest in respect of
     those Loans that are subject to Payment Holidays. As a result of making
     such payment the Seller Share of the Trust Property will increase by an
     amount equal to the amount paid to Funding 1 for Funding 1's Share of the
     Capitalised Interest and Funding 1's Share of the Trust Property will
     decrease by a corresponding amount. The cash payment shall be made in
     accordance with CLAUSE 6.4 below.

6.3  If an Insolvency Event occurs in respect of the Seller, then the Seller may
     acquire from Funding 1 its share of the Capitalised Interest in the same
     manner as is contemplated in CLAUSE 6.2, but it is not obliged to do so.

6.4  In respect of the cash payment to be made by the Seller pursuant to CLAUSE
     6.2, the Seller hereby directs the Mortgages Trustee to deduct from the
     Seller's Share of the Mortgages Trust Available Revenue Receipts (allocated
     to the Seller pursuant to CLAUSE 10.2 of this Deed) an amount equal to such
     cash payment and to pay the same to Funding 1 in satisfaction of the
     Seller's obligations under CLAUSE 6.2. To the extent that the Seller's
     Share of the Mortgages Trust Available Revenue Receipts is less than the
     amount required to be paid by it pursuant to CLAUSE 6.2, then the Seller
     shall pay an amount equal to the shortfall directly to Funding 1 from its
     own resources.

7.   PAYMENT BY THE SELLER TO FUNDING 1 OF THE AMOUNT OUTSTANDING UNDER AN
     INTERCOMPANY LOAN

7.1  CONDITIONS PRECEDENT TO ACCEPTANCE OF OFFER

     On each occasion that the Seller offers to make a payment to Funding 1 of
     the amount outstanding under an Intercompany Loan (referred to in this
     CLAUSE 7 as the "RELEVANT INTERCOMPANY LOAN"), then Funding 1 may accept
     that offer but only if:

     (a)  the Security Trustee has received written confirmation from each of
          the Rating Agencies that the then current ratings of the Notes would
          not be adversely affected by Funding 1 accepting the offer;



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     (b)  Funding 1 would receive the payment from the Seller on a Funding 1
          Interest Payment Date; and

     (c)  Funding 1 will apply the proceeds of the payment to repay the relevant
          Intercompany Loan and the relevant Issuer has confirmed to Funding 1
          that on that Funding 1 Interest Payment Date it will use the proceeds
          of the relevant payment to repay the corresponding classes of Notes.

7.2  ADJUSTMENT TO SHARES IF OFFER ACCEPTED

     If Funding 1 accepts the offer as described in CLAUSE 7.1 above, then the
     Funding 1 Share of the Trust Property shall decrease by an amount
     corresponding to the amount paid by the Seller and the Seller Share of the
     Trust Property shall increase by the same amount.

8.   ADJUSTMENT OF FUNDING 1 SHARE PERCENTAGE AND SELLER SHARE PERCENTAGE ON
     CALCULATION DATES

8.1  DISTRIBUTION

     On each Calculation Date, excluding, for the avoidance of doubt, the
     Initial Closing Date, the Funding 1 Share Percentage and the Seller Share
     Percentage will be recalculated by the Cash Manager (on behalf of the
     Mortgages Trustee and the Beneficiaries) based on the aggregate Outstanding
     Principal Balance of the Loans constituting the Trust Property (as adjusted
     from time to time) as at the close of business on the London Business Day
     immediately preceding that Calculation Date. On each Distribution Date, the
     Mortgages Trustee will distribute Principal Receipts and Revenue Receipts
     in accordance with CLAUSES 10 and 11 hereof.

8.2  CURRENT FUNDING 1 SHARE PERCENTAGE

     On each Calculation Date (the "RELEVANT CALCULATION DATE") or on the date
     that the Mortgages Trust terminates, the Current Funding 1 Share Percentage
     will be recalculated and the recalculated amount will take effect from the
     next Distribution Date. The "CURRENT FUNDING 1 SHARE PERCENTAGE" will be an
     amount, expressed as a percentage (calculated to an accuracy of five
     decimal places (rounded upwards), equal to:

                              A - B - C + D + E + F
                              --------------------- x 100
                                       G

     where,

     A =  the Current Funding 1 Share as calculated on the immediately
          preceding Calculation Date (or, in the case of the first Calculation
          Date, the Initial Funding 1 Share as at the Initial Closing Date);

     B =  the amount of any Principal Receipts to be distributed to Funding 1
          on the Distribution Date immediately following the relevant
          Calculation Date in accordance with the provisions described in CLAUSE
          11 below;

     C =  the amount of any Losses sustained on the Loans in the period from
          the last Calculation Date to the relevant Calculation Date and the
          amount of any reductions occurring in respect of the Loans as
          described in PARAGRAPHS (I) to (IV) of



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          CLAUSE 8.4(A), in each case allocated to Funding 1 in the Calculation
          Period ending on the relevant Calculation Date;

     D =  an amount equal to any consideration to be paid by Funding 1 to the
          Seller in relation to any New Loans to be assigned to the Mortgages
          Trustee on the Distribution Date immediately following the relevant
          Calculation Date;

     E =  an amount equal to any consideration to be paid by Funding 1 to the
          Seller in relation to any acquisition by Funding 1 from the Seller on
          the Distribution Date immediately following the relevant Calculation
          Date of an interest in the Trust Property;

     F =  an amount equal to any Capitalised Interest accruing on a Loan due
          to Borrowers taking payment holidays or which has been allocated to
          Funding 1 since the immediately preceding Calculation Date, less the
          amount to be paid by the Seller on the relevant Distribution Date to
          acquire an interest in the Trust Property in accordance with CLAUSE 6
          above; and

     G =  the aggregate Outstanding Principal Balance of all the Loans
          constituting the Trust Property as at the relevant Calculation Date
          including after making the distributions, allocations and additions
          referred to in (B), (C), (D), (E) and (F) above, and after taking
          account of any distributions of Principal Receipts to Funding 1 and
          the Seller, the amount of any Losses allocated to Funding 1 and the
          Seller, the amount of any increase in the balances of the loans
          constituting the Trust Property due to capitalisation of insurance
          premiums due by Borrowers or Borrowers taking Payment Holidays under
          Loans, the adjustments referred to in PARAGRAPHS (I) to (IV)
          (inclusive) of CLAUSE 8.4(A) below and the amount of any other
          additions or subtractions to the Trust Property.

8.3  CURRENT FUNDING 1 SHARE

     The "CURRENT FUNDING 1 SHARE" will be an amount equal to:

                              A - B - C + D + E + F

     where "A", "B", "C", "D", "E" and "F" have the meanings specified in CLAUSE
     8.2 above.

8.4  ADJUSTMENTS TO TRUST PROPERTY

(a)  On each relevant Calculation Date, the aggregate Outstanding Principal
     Balance of the Loans constituting the Trust Property shall be reduced or,
     as the case may be, deemed to be reduced for the purposes of the
     calculation set out in "G" above, if any of the following events has
     occurred during the Calculation Period immediately preceding the relevant
     Calculation Date:

     (i)  any Borrower exercises a right of set-off in relation to Loans
          constituting part of the Trust Property so that the amount of
          principal and/or interest owing under a loan is reduced but no
          corresponding amount is received by the Mortgages Trustee in which
          event the total amount of Trust Property shall be reduced by an amount
          equal to the amount set-off; and/or

     (ii) a Loan or its Related Security (i) is in breach of the Loan Warranties
          in the Mortgage Sale Agreement, (ii) is the subject of a Further
          Advance or (iii) is the subject of a



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          Product Switch in the circumstances set out in CLAUSE 8.4 of the
          Mortgage Sale Agreement or other obligation of the Seller to
          repurchase, and if the Seller fails to repurchase the Loan or Loans
          under the relevant Mortgage Account and their Related Security as
          required by the terms of the Mortgage Sale Agreement, then the Trust
          Property shall be deemed to be reduced for the purposes of the
          calculation of "G" in CLAUSE 8.2 above by an amount equal to the
          Outstanding Principal Balance of the relevant Loan or Loans under the
          relevant Mortgage Account together with Arrears of Interest and
          Accrued Interest; and/or

     (iii) the Seller would be required to repurchase a Loan and its Related
          Security in accordance with the terms of the Mortgage Sale Agreement,
          but such Loan and its Related Security are not capable of repurchase,
          in which case the Trust Property shall be deemed to be reduced for the
          purposes of the calculation of "G" in CLAUSE 8.2 above by an amount
          equal to the Outstanding Principal Balance of the relevant Loan or
          Loans under the relevant Mortgage Account together with Arrears of
          Interest and Accrued Interest; and/or

     (iv) the Seller materially breaches any other material warranty under the
          Mortgage Sale Agreement and/or (for so long as it is the Servicer) the
          Servicing Agreement, in which event the aggregate Outstanding
          Principal Balance of Loans constituting the Trust Property shall be
          deemed for the purposes of the calculation of "G" in CLAUSE 8.2 above
          to be reduced by an amount equivalent to all losses, costs,
          liabilities, claims, expenses and damages incurred by the
          Beneficiaries as a result of such breach.

(b)  The reductions and deemed reductions set out in PARAGRAPH (I), (II) (III),
     and (IV) of CLAUSE 8.4(A) above shall be made on the relevant Calculation
     Date first to the Seller's Share (including the Minimum Seller Share) of
     the Trust Property only, and thereafter shall be made to the Funding 1
     Share of the Trust Property.

(c)  If at any time after the Initial Closing Date the Mortgages Trustee holds,
     or there is held to its order, or it receives, or there is received to its
     order any property, interest, right or benefit relating to any Loan and its
     Related Security which is or has been subject to any reduction or deemed
     reduction pursuant to PARAGRAPHS (I) to (IV) of CLAUSE 8.4(A) above, then
     such property, interest, right or benefit shall constitute a Revenue
     Receipt under the relevant Loan. Such Revenue Receipt shall belong to
     Funding 1 (but only if and to the extent that the related reductions were
     applied against Funding 1's Share of the Trust Property) and thereafter
     shall belong to the Seller.

8.5  CURRENT SELLER SHARE PERCENTAGE

     On each Calculation Date, the "CURRENT SELLER SHARE PERCENTAGE" will be an
     amount calculated to the accuracy of five decimal places equal to:

                   100% - Current Funding 1 Share Percentage.

8.6  CURRENT SELLER SHARE

     The "CURRENT SELLER SHARE" will be an amount equal to:




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      Outstanding Principal Balance of all the Loans in the Trust Property
          on the relevant Calculation Date - Current Funding 1 Share.

8.7  FUNDING 1 SHARE/SELLER SHARE

     Neither the Funding 1 Share nor the Seller Share may be reduced below zero.
     At all times the Funding 1 Share Percentage and the Seller Share Percentage
     shall be equal to 100 per cent. of the Trust Property.

9.   MINIMUM SELLER SHARE

9.1  INITIAL MINIMUM SELLER SHARE

     The Seller Share of the Trust Property includes an amount equal to the
     Minimum Seller Share. Unless and until the Funding 1 Share of the Trust
     Property is in an amount equal to zero or an Asset Trigger Event occurs,
     the Seller will not be entitled to receive Principal Receipts which would
     reduce the Seller Share of the Trust Property to an amount less than the
     Minimum Seller Share and the Seller consents and directs the Mortgages
     Trustee accordingly.

9.2  FLUCTUATION OF MINIMUM SELLER SHARE ON EACH CALCULATION DATE

     At the Initial Closing Date, the Minimum Seller Share was
     (pound)500,000,000. The amount of the Minimum Seller Share will be
     recalculated on each Calculation Date in accordance with the following
     formula:

                                    X + Y + Z

     where:

     X =  5% of the aggregate Outstanding Principal Balance of all Loans
          comprised in the Trust Property;

     Y =  the product of: (p x q) x r where:

          p =  8%;

          q =  the "FLEXIBLE DRAW CAPACITY", being an amount equal to the
               excess of (i) the maximum amount that Borrowers are entitled to
               draw under Flexible Loans included in the Trust Property (whether
               or not drawn) over (ii) the aggregate principal balance of actual
               Flexible Loan advances made to Borrowers in the Trust Property on
               the relevant Calculation Date (but excluding the Initial Advances
               made thereunder); and

          r =  3; and

     Z =  the aggregate sum of reductions deemed made (if any) in accordance
          with PARAGRAPHS (II), (III) and (IV) of CLAUSE 8.4(A).

9.3  RECALCULATION OF MINIMUM SELLER SHARE FOLLOWING OCCURRENCE OF EXCEPTIONAL
     EVENTS

     Prior to the occurrence of a Trigger Event:



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     (a)  the calculation of the Minimum Seller Share in accordance with CLAUSE
          9.2 above will be recalculated or increased (in consultation with the
          relevant Rating Agencies) if the Seller merges or otherwise combines
          its business with another bank or other financial institution so as to
          increase the risks associated with Borrowers holding deposits in
          Halifax accounts and such merger or combination would adversely affect
          the then current ratings of the Notes and such adverse effect on the
          then current ratings of the Notes would be avoided if the Minimum
          Seller Share was so recalculated or increased;

     (b)  the calculation of the Minimum Seller Share in accordance with CLAUSE
          9.2 above will be recalculated or increased (in consultation with the
          relevant Rating Agencies) if notice has been received from one or more
          of the Rating Agencies that the then current ratings of the Notes
          would be downgraded and that such downgrade would be avoided if the
          Minimum Seller Share was so recalculated or increased;

     (c)  the amount of the Minimum Seller Share as calculated in accordance
          with CLAUSE 9.2 above will be decreased (and the calculation thereof
          amended accordingly) from time to time at the request of the Seller or
          Funding 1 (acting reasonably) provided that the Security Trustee has
          received written confirmation from each of the Rating Agencies that
          there would be no adverse effect on the then current ratings of the
          Notes as a result thereof.

10.  ALLOCATION AND DISTRIBUTION OF REVENUE RECEIPTS

10.1 ALLOCATION AND DISTRIBUTION OF THIRD PARTY AMOUNTS

     Pursuant to the Cash Management Agreement, the Cash Manager (at the
     direction of the Mortgages Trustee on behalf of the Beneficiaries at their
     direction and with their consent) will deduct, as and when identified,
     Third Party Amounts from the Revenue Receipts standing to the credit of the
     Mortgages Trustee GIC Account, and pay over the same to the proper
     recipients thereof. The Mortgages Trustee and the Beneficiaries hereby
     consent to such deductions.

10.2 ALLOCATION AND DISTRIBUTION OF MORTGAGES TRUST AVAILABLE REVENUE RECEIPTS

     On each Distribution Date the Cash Manager (at the direction of the
     Mortgages Trustee and on behalf of the Beneficiaries at their direction and
     with their consent) will allocate and distribute Mortgages Trust Available
     Revenue Receipts as follows:

     (a)  firstly, in or towards satisfaction pari passu and pro rata according
          to the respective amounts thereof of:

          (i)  any costs, charges, liabilities and expenses then due or to
               become due to the Mortgages Trustee under the provisions of this
               Deed together with VAT thereon as provided herein (if payable);
               and

          (ii) any amounts due and payable by the Mortgages Trustee to third
               parties in respect of the Mortgages Trust and incurred without
               breach by the Mortgages Trustee of the documents to which it is a
               party and for which payment has not been provided for elsewhere),
               (including amounts due to H.M Customs and Excise and/or to the
               Inland Revenue or any other taxation authority which has
               jurisdiction over the Trust Property or the Mortgages Trustee in
               respect



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               of any stamp, issue, registration, documentary and other fees,
               duties and taxes (including interest and penalties) payable by
               the Mortgages Trustee in connection with (i) the execution and
               delivery of this Deed; (ii) any action to be taken by or on
               behalf of the Mortgages Trustee to enforce or to resolve any
               doubt concerning or, for any other purpose in relation to, the
               Mortgages Trust Deed; and (iii) any such tax which is primarily
               due from either or both of Halifax and Funding 1 in their
               capacities as Beneficiaries (and, for the avoidance of doubt,
               only in such capacities) in circumstances where the Mortgages
               Trustee has made a payment of such tax (or part thereof) by
               reason of a failure by Halifax or Funding 1 to discharge their
               primary liability in respect of such tax);

     (b)  secondly, in or towards satisfaction of any remuneration then due and
          payable or to become due and payable during the following Calculation
          Period to the Servicer and any costs, charges, liabilities and
          expenses then due or to become due to the Servicer under the
          provisions of the Servicing Agreement, together with VAT thereon as
          provided therein (if payable);

     (c)  thirdly, to allocate and pay to Funding 1 an amount equal to the
          lesser of:

          (x)  an amount determined by multiplying the total amount of the
               remaining Mortgages Trust Available Revenue Receipts by the
               Funding 1 Share Percentage of the Trust Property (as determined
               on the Relevant Share Calculation Date); and

          (y)  the aggregate of Funding 1's obligations on the immediately
               succeeding Funding 1 Interest Payment Date as set out under the
               Funding 1 Pre-Enforcement Revenue Priority of Payments or, as the
               case may be, the Funding 1 Post-Enforcement Priority of Payments
               (but excluding any principal amount due under any Intercompany
               Loan and/or items (i) and (j) of the Funding 1 Post-Enforcement
               Priority of Payments), less (in each case only to the extent that
               such amounts of interest or income would not otherwise be payable
               under the Intercompany Loan or, as applicable, the Notes, on the
               succeeding Interest Payment Date) the sum of (i) the interest or
               other income credited or to be credited to Funding 1's Bank
               Accounts on the immediately succeeding Funding 1 Interest Payment
               Date and (ii) all other income (not derived from the distribution
               of Revenue Receipts under the Mortgages Trust) which will
               constitute Funding 1 Available Revenue Receipts on the succeeding
               Funding 1 Interest Payment Date;

     (d)  fourthly, to allocate and distribute to the Mortgages Trustee and/or
          Funding 1 (as applicable), an amount equal to any Loss Amount suffered
          or incurred by it or them (as applicable); and

     (e)  fifthly, to allocate and distribute to the Seller an amount equal to
          (if positive) the Mortgages Trust Available Revenue Receipts less the
          amount of such Mortgages Trust Available Revenue Receipts applied
          and/or allocated under PARAGRAPHS (A) to (D) above.


                                       11
<PAGE>
11.  ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS

11.1 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS

(a)  On each Calculation Date (the "RELEVANT CALCULATION DATE"), prior to
     distributing any Principal Receipts, the Cash Manager shall ascertain:

     (i)  the amount of Mortgages Trust Available Principal Receipts;

     (ii) whether the Distribution Date immediately succeeding the relevant
          Calculation Date is within a Cash Accumulation Period relating to a
          Bullet Term Advance or a Scheduled Amortisation Instalment (the Cash
          Accumulation Period being calculated separately for each Bullet Term
          Advance and Scheduled Amortisation Instalment); and

     (iii) Funding 1's Cash Accumulation Requirement and Repayment Requirement.

(b)  On each Distribution Date, the Cash Manager (at the direction of the
     Mortgages Trustee acting on behalf of the Beneficiaries at their direction
     and with their consent) shall then allocate and distribute Principal
     Receipts as provided in this CLAUSE 11.

11.2 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS PRIOR TO THE OCCURRENCE
     OF A TRIGGER EVENT

     On each Distribution Date where no Trigger Event has occurred on or before
     the immediately preceding Calculation Date, the Cash Manager shall allocate
     and distribute Mortgages Trust Available Principal Receipts as follows:

     (a)  firstly, where Funding 1 has no Cash Accumulation Requirement and no
          Repayment Requirement on that Distribution Date, to allocate the
          Mortgages Trust Available Principal Receipts to the Seller until the
          Seller Share of the Trust Property (as calculated on the Relevant
          Share Calculation Date) is equal to the Minimum Seller Share;

     (b)  secondly, if Funding 1 has a Cash Accumulation Requirement on that
          Distribution Date, to allocate the Mortgages Trust Available Principal
          Receipts to Funding 1 in an amount up to but not exceeding Funding 1's
          Cash Accumulation Requirement on that Distribution Date;

     (c)  thirdly, if Funding 1 has a Repayment Requirement on that Distribution
          Date, to allocate the Mortgages Trust Available Principal Receipts to
          Funding 1 in an amount up to but not exceeding Funding 1's Repayment
          Requirement on that Distribution Date; and

     (d)  fourthly, to allocate the remainder of the Mortgages Trust Available
          Principal Receipts, if any, to the Seller until the Seller Share of
          the Trust Property (as calculated on the Relevant Share Calculation
          Date) is equal to the Minimum Seller Share.



                                       12
<PAGE>

11.3 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS ON OR AFTER THE
     OCCURRENCE OF A NON-ASSET TRIGGER EVENT BUT PRIOR TO THE OCCURRENCE OF AN
     ASSET TRIGGER EVENT

     On each Distribution Date where a Non-Asset Trigger Event has occurred on
     or before the immediately preceding Calculation Date and an Asset Trigger
     Event has not occurred on or before that Calculation Date, all Mortgages
     Trust Available Principal Receipts shall be allocated and distributed to
     Funding 1 until the Funding 1 Share of the Trust Property (as calculated on
     the relevant Share Calculation Date) is zero and shall thereafter be
     allocated and paid to the Seller.

11.4 ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS ON OR AFTER THE
     OCCURRENCE OF AN ASSET TRIGGER EVENT

     On each Distribution Date where an Asset Trigger Event has occurred on or
     before the immediately preceding Calculation Date, all Mortgages Trust
     Available Principal Receipts shall be allocated and distributed pari passu
     and pro rata between Funding 1 and the Seller according to the Current
     Funding 1 Share Percentage of the Trust Property (as calculated on the
     Relevant Share Calculation Date) and the Current Seller Share Percentage of
     the Trust Property (as calculated on the Relevant Share Calculation Date)
     respectively until, in the case of Funding 1, the Funding 1 Share of the
     Trust Property is zero (and, for the avoidance of doubt, such payments may
     reduce the Current Seller Share to an amount less than the Minimum Seller
     Share). When the Funding 1 Share of the Trust Property is zero, the
     remaining Mortgages Trust Available Principal Receipts (if any) shall be
     allocated to the Seller.

12.  ALLOCATION OF LOSSES

     Subject as provided in this Deed (and in particular, CLAUSE 8), all Losses
     sustained on the Loans during a Calculation Period shall be applied in
     reducing pro rata both the Funding 1 Share and the Seller Share of the
     Trust Property on each relevant Distribution Date by multiplying the Losses
     in the relevant Calculation Period by the Current Funding 1 Share
     Percentage, (as calculated on the Relevant Share Calculation Date), the
     product of which shall be allocated to Funding 1, and the remainder of such
     Losses shall be allocated to the Seller, on each Calculation Date, in each
     case prior to calculating the allocation of Mortgages Trustee Available
     Principal Receipts on that Calculation Date.

13.  FUNDING 2 BECOMES A BENEFICIARY OF THE MORTGAGES TRUST

     On not more than 60 days' written notice nor less than 20 days' written
     notice to the Mortgages Trustee, Funding 1 and the Seller may direct the
     Mortgages Trustee to add Funding 2 as a beneficiary to the Mortgages Trust.
     The Mortgages Trustee shall include Funding 2 as a beneficiary of the
     Mortgages Trust if Funding 1 (or the Security Trustee) notifies the
     Mortgages Trustee in writing that the following conditions precedent are
     satisfied on the date of such inclusion:

     (a)  that the Security Trustee has received written confirmation from each
          of the Rating Agencies that the inclusion of Funding 2 as a
          beneficiary of the Mortgages Trust would not have an adverse effect on
          the then current ratings of the Notes;

     (b)  no deficiency is recorded on the Principal Deficiency Ledger as at the
          most recent Funding 1 Interest Payment Date;



                                       13
<PAGE>

     (c)  no Note Event of Default or Intercompany Loan Event of Default shall
          have occurred which is continuing or unwaived as at the relevant
          Distribution Date;

     (d)  requisite amendments have been made to the Transaction Documents to
          enable the inclusion of Funding 2 as a beneficiary to the Mortgages
          Trust (including, without limitation, changes to the way in which the
          Mortgages Trustee will allocate Mortgages Trust Revenue Receipts and
          Mortgages Trust Principal Receipts under this Deed); and

     (e)  the Reserve Fund has not been debited on or before the relevant
          Distribution Date for the purposes of curing a Principal Deficiency in
          respect of the Term Advances in circumstances where the Reserve Fund
          has not been replenished by a corresponding amount by the date.

14.  LEDGERS

     The Mortgages Trustee shall maintain, or shall procure that there are
     maintained, the following Mortgages Trustee Ledgers:

     (a)  the Principal Ledger, which shall record all receipts of Principal
          Receipts and distribution of the same to Funding 1 and the Seller;

     (b)  the Revenue Ledger, which shall record all receipts of Revenue
          Receipts and distribution of the same to Funding 1 and the Seller;

     (c)  the Losses Ledger, which shall record Losses in relation to the Loans;
          and

     (d)  the Funding 1 Share/Seller Share Ledger which shall record the Current
          Funding 1 Share, the Current Seller Share of the Trust Property, the
          Current Funding 1 Share Percentage and the Current Seller Share
          Percentage.

15.  COSTS AND EXPENSES OF THE MORTGAGES TRUSTEE

     The Mortgages Trustee shall be entitled to charge and be remunerated for
     the work undertaken by it as trustee of the trusts created by this Deed.
     The remuneration shall be on such terms (if any) as the Mortgages Trustee
     may from time to time agree with the Seller and Funding 1 in writing. In
     default of such agreement, Funding 1 and the Seller shall indemnify the
     Mortgages Trustee from time to time with such regularity as is reasonably
     agreed between the parties, of the documentable costs and expenses directly
     and properly incurred by the Mortgages Trustee in performing its
     obligations hereunder together with any amounts in respect of Irrecoverable
     VAT incurred in respect of such costs and expenses. The cost of such
     indemnity shall be paid in accordance with the priority of payments set out
     in CLAUSE 10.2 of this Deed.

16.  DIRECTIONS FROM BENEFICIARIES

16.1 On the Initial Closing Date, the Mortgages Trustee entered into the
     Servicing Agreement, the Cash Management Agreement, the Mortgage Sale
     Agreement, the Mortgages Trustee Guaranteed Investment Contract and the
     Bank Account Agreement.

16.2 Subject to CLAUSE 16.3 below, the Mortgages Trustee covenants with the
     Seller and Funding 1 that the Mortgages Trustee shall take all necessary
     steps and do everything which both



                                       14
<PAGE>

     Funding 1 and the Seller (acting together) may reasonably request or direct
     it to do in order to give effect to the terms of this Deed or the other
     Transaction Documents to which the Mortgages Trustee is a party.

16.3 Funding 1 and the Seller covenant with each other that neither shall direct
     or request the Mortgages Trustee to do any act or thing which breaches the
     terms of, or is otherwise expressly dealt with (such that the Mortgages
     Trustee has no discretion) by, any of the Transaction Documents.

16.4 NO REQUIREMENT TO ACT

     The Mortgages Trustee will not be bound and shall have no power to take any
     proceedings, actions or steps under or in connection with any of this Deed
     or the other Transaction Documents to which it is a party unless:

     (a)  it shall have been directed to do so by the Beneficiaries or it is
          required to do so under any express provision of this Deed or the
          other Transaction Documents (but subject to CLAUSE 16.2 in respect of
          conflict of directions); and

     (b)  it shall have been indemnified to its satisfaction against all
          liabilities, proceedings, claims and demands to which it may be or
          become liable and all costs, charges and expenses which may be
          incurred by it in connection therewith and the terms of such indemnity
          may include the provision of a fighting fund, non-recourse loan or
          other similar arrangement.

16.5 COVENANT OF THE MORTGAGES TRUSTEE

     Subject to CLAUSE 16.2, the Mortgages Trustee covenants with each of the
     Seller and Funding 1 to exercise all of its rights arising under the Trust
     Property (including without limitation any rights of enforcement) for the
     benefit of and on behalf of the Beneficiaries.

17.  TRANSFERS

17.1 FUNDING 1 SHALL NOT ASSIGN

     Subject to the terms of the Transaction Documents (including for the
     avoidance of doubt, the Funding 1 Deed of Charge) and the right of Funding
     1 (or the Security Trustee or a Receiver on its behalf) to sell the Funding
     1 Share of the Trust Property following the service of an Intercompany Loan
     Enforcement Notice (which right is hereby conferred), Funding 1 covenants
     with the Seller that it shall not, and shall not purport to, sell, assign,
     transfer, convey, charge, declare a trust over, create any beneficial
     interest in, or otherwise dispose of the Funding 1 Share in the Trust
     Property and/or its rights under this Deed, or any of Funding 1's rights,
     title and interest or benefit in the Trust Property and/or this Deed to or
     in favour of a third party.

17.2 SELLER SHALL NOT ASSIGN

     Subject to the terms of the Transaction Documents, the Seller covenants
     with Funding 1 that it shall not, and shall not purport to, sell, assign,
     transfer, convey, charge, declare a trust over, create any beneficial
     interest in, or otherwise dispose of the Seller Share in the Trust Property
     and/or its rights under this Deed or any of the Seller's rights, title and
     interest or benefit in the



                                       15
<PAGE>

     Trust Property and/or this Deed to or in favour of a third party, without
     the prior consent of Funding 1 (such consent not to be unreasonably
     withheld).

17.3 TRANSFERS TO FUNDING 2

     Subject to CLAUSE 13, the parties hereby acknowledge that Funding 2 may
     become a beneficiary to the Mortgages Trust after the Initial Closing Date
     and if it is to become a such a beneficiary then the Seller and/or Funding
     1 shall be entitled to sell, assign, transfer, convey, charge, declare a
     trust over, create a beneficial interest in, or otherwise dispose of the
     their respective shares in the Trust Property to Funding 2 or, as the case
     may be, Funding 1 or the Seller.

18.  COVENANTS OF THE MORTGAGES TRUSTEE

     Save with the prior written consent of the Beneficiaries or as provided in
     or envisaged by this Deed and the other Transaction Documents to which the
     Mortgages Trustee is a party, the Mortgages Trustee shall not, so long as
     it is acting as Mortgages Trustee hereunder:

     (a)  NEGATIVE PLEDGE

          create or permit to subsist any mortgage, pledge, lien, charge or
          other security interest whatsoever (unless arising by operation of
          law), upon the whole or any part of its assets (including any uncalled
          capital) or its undertakings, present or future;

     (b)  DISPOSAL OF ASSETS

          transfer, sell, lend, part with or otherwise dispose of, or deal with,
          or grant any option or present or future right to acquire any of its
          assets or undertakings or any interest, estate, right, title or
          benefit therein or thereto or agree or attempt or purport to do so;

     (c)  EQUITABLE INTEREST

          permit any person other than the Beneficiaries to have any equitable
          interest in any of its assets or undertakings or any interest, estate,
          right, title or benefit therein;

     (d)  BANK ACCOUNTS

          have an interest in any bank account, other than as set out in the
          Transaction Documents;

     (e)  RESTRICTIONS ON ACTIVITIES

          carry on any business other than as described in this Deed and the
          Mortgage Sale Agreement;

     (f)  BORROWINGS

          incur any indebtedness in respect of borrowed money whatsoever or give
          any guarantee or indemnity in respect of any such indebtedness;



                                       16
<PAGE>

     (g)  MERGER

          consolidate or merge with any other person or convey or transfer its
          properties or assets substantially as an entirety to any other person;

     (h)  EMPLOYEES OR PREMISES

          have any employees or premises or subsidiaries;

     (i)  FURTHER SHARES

          issue any further shares;

     (j)  ACQUISITIONS

          acquire any assets other than pursuant to the terms of the Mortgage
          Sale Agreement and this Mortgages Trust Deed (whereby any New
          Portfolio shall be held by the Mortgages Trustee subject to the
          Mortgages Trust); or

     (k)  UNITED STATES ACTIVITIES

          engage in any activities in the United States (directly or through
          agents) or derive any income from United States sources as determined
          under United States income tax principles or hold any property if
          doing so would cause it to be engaged or deemed to be engaged in a
          trade or business within the United States as determined under United
          States tax principles.

19.  POWER TO DELEGATE

19.1 POWER TO DELEGATE

     Subject to CLAUSE 19.2, the Mortgages Trustee may (notwithstanding any rule
     of law or equity to the contrary) delegate (revocably or irrevocably and
     for a limited or unlimited period of time) the performance of all or any of
     its obligations and the exercise of all or any of its powers under this
     Deed or imposed or conferred on it by law or otherwise to any person or
     body of persons fluctuating in number selected by it and any such
     delegation may be by power of attorney or in such other manner as the
     Mortgages Trustee may think fit and may be made upon such terms and
     conditions (including the power to sub-delegate) as the Mortgages Trustee
     may think fit.

19.2 NO FURTHER APPOINTMENTS

     Notwithstanding the provisions of CLAUSE 19.1, the Mortgages Trustee shall
     not appoint any agent, attorney or other delegate having power to act in
     respect of the Trust Property unless it is directed in writing to do so by
     the Beneficiaries. The appointment of any agent, attorney or other delegate
     shall terminate immediately upon the occurrence of a Trigger Event.

20.  POWERS OF INVESTMENT

     Save as expressly provided for in this Deed, the Mortgages Trustee
     Guaranteed Investment Contract and the Bank Account Agreement, the
     Mortgages Trustee shall have no further or



                                       17
<PAGE>

     other powers of investment with respect to the Trust Property and neither
     the Trustee Act 2000 nor any other provision relating to trustee powers of
     investment implied by statute or general law shall apply to the Mortgages
     Trust and, for the avoidance of doubt, the statutory power to accumulate
     income conferred on trustees by Section 31 of the Trustee Act 1925 is
     expressly excluded.

21.  OTHER PROVISIONS REGARDING THE MORTGAGES TRUSTEE

21.1 NO ACTION TO IMPAIR TRUST PROPERTY

     Except for actions expressly authorised by this Deed, the Mortgages Trustee
     shall take no action reasonably likely to impair the interests of the
     Beneficiaries in any Trust Property now existing or hereafter created or to
     impair the value of any Loan or its Related Security subject to the
     Mortgages Trust.

21.2 LITIGATION

     The Mortgages Trustee must not prosecute or defend any legal or other
     proceedings anywhere in the world (at the cost of the Trust Property)
     unless it obtains legal or other advice that it is in the interests of the
     Beneficiaries to do so.

21.3 NO IMPLIED DUTIES

     The duties and obligations of the Mortgages Trustee under the Mortgages
     Trust shall be determined solely by the express provisions of this Deed
     (but without prejudice to the duties and obligations of the Mortgages
     Trustee under any of the other Transaction Documents). The Mortgages
     Trustee shall not be liable under this Deed except for the performance of
     such duties and obligations as shall be specifically set forth in this
     Deed. No implied covenants or obligations shall be read into this Deed
     against the Mortgages Trustee, and the permissible right of the Mortgages
     Trustee to do things set out in this Deed shall not be construed as a duty.

21.4 NO LIABILITY

     Neither the Mortgages Trustee, Funding 1 (in its capacity as a Beneficiary
     hereunder) nor the Seller (in its capacity as a Beneficiary hereunder)
     shall be liable to each other, in the absence of wilful default, negligence
     or breach of the terms of this Deed, in respect of any loss or damage which
     arises out of the exercise or attempted or purported exercise or failure to
     exercise any of their respective powers.

21.5 RELIANCE ON CERTIFICATES

     The Mortgages Trustee may rely on and shall be protected in acting on, or
     in refraining from acting in accordance with, any resolution, officer's
     certificate, certificate of auditors or any other certificate, statement,
     instrument, opinion, report, notice, request, consent, order, appraisal,
     bond or other paper or document believed by it to be genuine and to have
     been signed or presented to it pursuant to the Transaction Documents by the
     proper party or parties.



                                       18
<PAGE>

21.6 RELIANCE ON THIRD PARTIES

     The Mortgages Trustee may, in relation to these presents, act on the
     opinion or advice of or a certificate or any information obtained from any
     lawyer, banker, valuer, broker, accountant, financial adviser, securities
     dealer, merchant bank, computer consultant or other expert in the United
     Kingdom or elsewhere and shall not, provided that it shall not have acted
     fraudulently or in breach of any of the provisions of the Transaction
     Documents, be responsible for any loss occasioned by so acting. Any such
     opinion, advice, certificate or information may be sent or obtained by
     letter, telemessage, telex, cable or facsimile device and the Mortgages
     Trustee shall not be liable for acting on any opinion, advice, certificate
     or information purporting to be so conveyed although the same shall contain
     some error or shall not be authentic, provided that such error or lack of
     authenticity shall not be manifest.

22.  NO RETIREMENT OF MORTGAGES TRUSTEE

22.1 NO RETIREMENT

     The Mortgages Trustee shall not, and shall not purport to, retire as the
     trustee of the Mortgages Trust or appoint any additional trustee of the
     Mortgages Trust and shall have no power to retire or appoint any additional
     trustee under the Trustee Act 1925 or otherwise.

22.2 NO REPLACEMENT

     Neither the Seller nor Funding 1 shall at any time remove or purport to
     remove and/or replace the Mortgages Trustee as the trustee of the Mortgages
     Trust.

22.3 NO TERMINATION

     Prior to the payment by Funding 1 of all amounts owing under the
     Intercompany Loan Agreements and under the Transaction Documents, neither
     the Seller nor Funding 1 shall at any time, except in accordance with the
     provisions of CLAUSES 16 and 23, terminate or purport to terminate the
     Mortgages Trust and, in particular, but without prejudice to the generality
     of the foregoing, the Seller and Funding 1 shall not in reliance on their
     absolute beneficial interests in the Trust Property call for the transfer
     to them or vesting in them of the legal estate in all or any part of the
     Trust Property.

23.  TERMINATION

     The Mortgages Trust shall terminate in respect of the Trust Property (if
     any then remains) upon the later to occur of:

     (a)  the date upon which the Funding 1 Share of the Trust Property is zero;
          and

     (b)  any other date agreed in writing by Funding 1 and the Seller.

24.  FURTHER ASSURANCES

     The parties agree that they will co-operate fully to do all such further
     acts and things and execute any further documents as may be necessary or
     desirable to give full effect to the arrangements contemplated by this
     Deed.



                                       19
<PAGE>

25.  AMENDMENTS

25.1 AMENDMENTS AND WAIVERS

     Without prejudice to CLAUSE 25.8 of the Funding 1 Deed of Charge, no
     amendment or waiver of any provision of this Deed nor consent to any
     departure by any of the parties therefrom shall in any event be effective
     unless the same shall be in writing and signed by each of the parties to
     this Deed. In the case of a waiver or consent, such waiver or consent shall
     be effective only in the specific instance and as against the party or
     parties giving it for the specific purpose for which it is given.

25.2 ENTIRE AGREEMENT

     This Deed contains a final and complete integration of all prior
     expressions by the parties with respect to the subject matter of this Deed
     and constitutes the entire agreement among the parties with respect to the
     subject matter of this Deed superseding all prior oral or written
     understandings other than the other Transaction Documents.

26.  NON PETITION COVENANT

     The Seller hereby agrees that it shall not institute against either Funding
     1 or the Mortgages Trustee any winding-up, administration, insolvency or
     similar proceedings so long as any sum is outstanding under any
     Intercompany Loan Agreement for the duration of one year plus one day since
     the last day on which any such sum was outstanding.

27.  NO PARTNERSHIP OR AGENCY

     Nothing in this Deed shall be taken to constitute or create a partnership
     between any of the parties to this Deed or to make or appoint the Seller
     the agent of Funding 1 (or vice versa).

28.  CALCULATIONS

     In the absence of manifest error, any determination or calculation made by
     or on behalf of the Mortgages Trustee in connection with the provisions of
     this Deed shall be deemed to be conclusive.

29.  NO WAIVER; REMEDIES

     No failure on the part of any party to this Deed to exercise, and no delay
     in exercising, any right hereunder shall operate as a waiver thereof, nor
     shall any single or partial exercise of any right or remedy preclude any
     other or further exercise thereof or the exercise of any other right or
     remedy. The remedies in this Deed are cumulative and not exclusive of any
     remedies provided by law.

30.  EXECUTION IN COUNTERPARTS; SEVERABILITY

30.1 COUNTERPARTS

     This Deed may be executed in any number of counterparts (manually or by
     facsimile) each of which when so executed and delivered is an original, but
     all the counterparts together constitute the same document.



                                       20
<PAGE>

30.2 SEVERABILITY

     Where any provision in or obligation under this Deed shall be invalid,
     illegal or unenforceable in any jurisdiction, the validity, legality and
     enforceability of the remaining provisions or obligations under this Deed,
     or of such provision or obligation in any other jurisdiction, shall not be
     affected or impaired thereby.

31.  TAX

31.1 Any payment by Funding 1 to the Seller to increase its share of the Trust
     Property shall be inclusive of value added tax (if any).

31.2 Any payment by the Seller to Funding 1 which would increase its share of
     the Trust Property shall be exclusive of VAT (if any).

31.3 Any stamp duty or stamp duty reserve tax in respect of any increase in
     Funding 1's share of the Trust Property shall be payable by the Seller.

32.  CONFIDENTIALITY

32.1 GENERAL OBLIGATION OF CONFIDENTIALITY

     Unless otherwise required by applicable law, and subject to CLAUSE 32.2
     below, each of the parties agrees not to disclose to any person any
     information relating to the business, finances or other matters of a
     confidential nature of or relating to any other party to this Deed or any
     of the Transaction Documents which it may have obtained as a result of
     having entered into this Deed or otherwise.

32.2 EXCEPTIONS

     The provisions of CLAUSE 32.1 above shall not apply:

     (a)  to the disclosure of any information to any person who is a party to
          any of the Transaction Documents as expressly permitted by the
          Transaction Documents;

     (b)  to the disclosure of any information which is or becomes public
          knowledge otherwise than as a result of the wrongful conduct of the
          recipient;

     (c)  to the extent that the recipient is required to disclose the same
          pursuant to any law or order of any court or pursuant to any direction
          or requirement (whether or not having the force of law) of any central
          bank or any governmental or other regulatory or Taxation authority;

     (d)  to the disclosure of any information to professional advisers who
          receive the same under a duty of confidentiality;

     (e)  to the disclosure of any information with the consent of the parties
          to this Deed;

     (f)  to the disclosure to the Rating Agencies or any of them of such
          information as may be requested by any of them for the purposes of
          setting or reviewing the rating assigned to the Notes (or any of
          them), provided that no information which would



                                       21
<PAGE>

          disclose the identity of a Borrower shall be disclosed to the Rating
          Agencies or any of them;

     (g)  to the disclosure of any information disclosed to a prospective
          assignee of Funding 1 (provided that it is disclosed on the basis that
          the recipient will hold it confidential); or

     (h)  to any disclosure for the purposes of collecting in or enforcing the
          Trust Property or any of it.

33.  EXCLUSION OF THIRD PARTY RIGHTS

     The parties to this Deed do not intend that any term of this Deed should be
     enforced, by virtue of the Contracts (Rights of Third Parties) Act 1999, by
     any person who is not a party to this Deed.

34.  ADDRESSES FOR NOTICES

     Any notices to be given pursuant to this Deed will be sufficiently served
     if sent by prepaid first class post, by hand or facsimile transmission and
     will 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 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 the Seller, to Halifax plc, at Trinity Road, Halifax,
          West Yorkshire HX1 2RG (facsimile number +44 (0) 1422 391777) for the
          attention of the 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;

     (b)  in the case of the Mortgages Trustee, to Permanent Mortgages Trustee
          Limited, 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands
          (facsimile number +44 (0) 1534 726391) for the attention of the
          Company 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;

     (c)  in the case of Funding 1, to Permanent Funding (No. 1) Limited,
          Blackwell House, Guildhall Yard, London, EC2V 5AE (facsimile number
          +44 (0) 20 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;

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



                                       22
<PAGE>

          or to such other address or facsimile number or for the attention of
          such other person or entity as may from time to time be notified by
          any party to the others by written notice in accordance with the
          provisions of this CLAUSE 33.

35.  GOVERNING LAW AND SUBMISSION TO JURISDICTION

35.1 GOVERNING LAW

     This Deed is governed by, and shall be construed in accordance with,
     English law.

35.2 SUBMISSION TO JURISDICTION

     Each party to this Deed hereby irrevocably submits to the non-exclusive
     jurisdiction of the English courts in any action or proceeding arising out
     of or relating to this Deed, 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 Deed 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. The Mortgages Trustee irrevocably appoints Structured Finance
     Management Limited at Blackwell House, Guildhall Yard, London EC2V 5AE as
     its agent for service of process.

36.  EXCLUSION OF TRUSTEE ACT 2000

     The Trustee Act 2000 is hereby excluded to the maximum extent permissible,
     to the intent that it shall not apply to the trusts constituted by this
     Deed and that the parties shall be in the same position as they would be
     had that Act not come into force.

IN WITNESS of which this Deed has been executed by the parties hereto as a deed
which has been delivered on the date first appearing on page one.



                                       23
<PAGE>

EXECUTED as a DEED by                  )
HALIFAX PLC                            )
as Seller, Cash Manager                )
and Beneficiary                        )
acting by its attorney                 )
in the presence of                     )

Witness:

Name:

Address:

EXECUTED as a DEED by                  )
PERMANENT FUNDING (NO. 1)              )
LIMITED as Beneficiary                 )
acting by                              )

..........................
Director

..........................
Director/Secretary

EXECUTED as a DEED by                  )
PERMANENT MORTGAGES TRUSTEE            )
LIMITED as Mortgages Trustee           )
acting by                              )

..........................
Director

..........................
Director/Secretary

EXECUTED as a DEED by                  )
SFM OFFSHORE                           )
LIMITED as Share Trustee of the        )
Mortgages Trustee                      )
acting by                              )

..........................
Director

..........................
Director/Secretary


                                       24
<PAGE>


                             DATED [6TH MARCH], 2003

                                   HALIFAX PLC

                                       and

                        PERMANENT FUNDING (NO. 1) LIMITED

                                       and

                       PERMANENT MORTGAGES TRUSTEE LIMITED

                                       and

                              SFM OFFSHORE LIMITED

           ----------------------------------------------------------

                    AMENDED AND RESTATED MORTGAGES TRUST DEED

           -----------------------------------------------------------