EXHIBIT 4.1





                               Dated 26 May 2004
                               -----------------



                        GRANITE FINANCE FUNDING LIMITED
                                  as Funding





                          GRANITE MORTGAGES 04-2 PLC
                               as Current Issuer





                             THE BANK OF NEW YORK
                              as Security Trustee


                                    - and -


                                CITIBANK, N.A.
                                 as Agent Bank





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

                     ISSUER INTERCOMPANY LOAN CONFIRMATION

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






                          SIDLEY AUSTIN BROWN & WOOD
                               WOOLGATE EXCHANGE
                             25 BASINGHALL STREET
                                LONDON EC2V 5HA
                            TELEPHONE 020 7360 3600
                            FACSIMILE 020 7626 7937


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                               Table of Contents
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                                                                          Page
                                                                          ----


1.     Interpretation........................................................1

2.     Intercompany Loan Terms and Conditions................................2

3.     The Current Issuer Intercompany Loan..................................2

4.     Interest..............................................................2

5.     Repayment.............................................................3

6.     Certain Fees, etc.....................................................4

7.     Additional Covenants..................................................5

8.     Declaration of Trust..................................................5

9.     Addresses.............................................................5

SCHEDULE 1  CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN......................8


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THIS AGREEMENT is dated 26 May 2004 between:

(1)  GRANITE FINANCE FUNDING LIMITED (registered number 79308), a private
     limited company incorporated under the laws of Jersey, but acting out of
     its branch office established in England (registered overseas company
     number FC022999 and branch number BR005916) at 69 Park Lane, Croydon CR9
     1TQ as Funding;

(2)  GRANITE MORTGAGES 04-2 PLC (registered in England and Wales No. 5057377),
     a public limited company incorporated under the laws of England and Wales
     whose registered office is at Fifth Floor, 100 Wood Street, London EC2V
     7EX as Current Issuer;

(3)  THE BANK OF NEW YORK, whose offices are at One Canada Square, 48th Floor,
     London E14 5AL in its capacity as Security Trustee; and

(4)  CITIBANK, N.A., acting through its offices at 5 Carmelite Street, London
     EC4Y 0PA in its capacity as Agent Bank.

IT IS AGREED as follows:

1.   Interpretation

1.1  The provisions of:

     (a)  the Master Definitions Schedule as amended and restated by (and
          appearing in Appendix 1 to) the Master Definitions Schedule Eighth
          Amendment Deed made on 26 May 2004 between, among others, the
          Seller, Funding and the Mortgages Trustee, and

     (b)  the Issuer Master Definitions Schedule signed for the purposes of
          identification by Sidley Austin Brown & Wood and Allen & Overy LLP
          on 26 May 2004,

     (as the same have been and may be amended, varied or supplemented from
     time to time with the consent of the parties hereto) are expressly and
     specifically incorporated into and shall apply to this Agreement. The
     Issuer Master Definitions Schedule specified as above shall prevail to
     the extent that it conflicts with the Master Definitions Schedule.

1.2  Specific terms: Unless the context otherwise requires, references in the
     Intercompany Loan Terms and Conditions to:

     "Closing Date" shall mean 26 May, 2004;

     "Intercompany Loan" shall mean the Current Issuer Intercompany Loan;

     "Intercompany Loan Agreement" shall mean the Current Issuer Intercompany
     Loan Agreement;

     "Intercompany Loan Confirmation" shall mean this Current Issuer
     Intercompany Loan Confirmation;


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     "Issuer" shall mean the Current Issuer;

     "Issuer Transaction Accounts" shall mean the Current Issuer Transaction
     Accounts; and

     "Notes" shall mean the Current Issuer Notes.

2.   Intercompany Loan Terms and Conditions

     Each of the parties to this Agreement agrees that the Intercompany Loan
     Terms and Conditions signed by Funding, the Security Trustee and the
     Agent Bank for the purposes of identification on 26 March 2001 (as the
     same has been and may be amended, varied, novated or supplemented from
     time to time by the parties thereto) and the provisions set out therein
     shall form part of this Agreement and shall be binding on the parties to
     this Agreement as if they had been expressly set out herein. References
     in this Agreement to "this Agreement" shall be construed accordingly.

3.   The Current Issuer Intercompany Loan

3.1  Grant of Current Issuer Intercompany Loan: On and subject to the terms of
     this Agreement, the Current Issuer hereby grants an Intercompany Loan to
     Funding as follows:

     (a)  the maximum amount available for utilisation under that Intercompany
          Loan shall be (GBP)3,650,288,662; and

     (b)  for all purposes the Outstanding Principal Amount of the
          Intercompany Loan and principal amount outstanding and payable
          and/or repayable in respect of that Intercompany Loan shall be:

          (i)  the total amount utilised in respect of that Intercompany Loan
               multiplied by 100%, less

          (ii) the aggregate principal amounts repaid in respect of the
               Intercompany Loan in accordance with the Intercompany Loan
               Agreement.

3.2  Conditions Precedent: Save as the Current Issuer may otherwise agree, the
     Current Issuer Intercompany Loan will not be available for utilisation
     unless the Current Issuer has confirmed to Funding (with a copy of such
     confirmation to the Security Trustee) that it or its advisers have
     received all the information and documents listed in Schedule 1 in form
     and substance satisfactory to the Current Issuer.

4.   Interest

4.1  Payment subject to terms of the Current Issuer Cash Management Agreement:
     The terms and conditions of this Clause 4 are to be read in conjunction
     with the provisions of Part 3 of Schedule 2 to the Current Issuer Cash
     Management Agreement, as the same may be amended or varied from time to
     time in accordance with the provisions thereof.

4.2  Payment of Interest: Subject to Clause 4 of the Intercompany Loan Terms
     and Conditions, on each Payment Date Funding will pay to the Current
     Issuer for same


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     day value to the Current Issuer Sterling Account an amount of interest
     equal to the amount of interest required by the Current Issuer on such
     Payment Date (or such other date on which an amount of interest is
     payable by the Current Issuer) to fund (by payment to any Swap Provider
     or otherwise) the amount payable by the Current Issuer on such Payment
     Date (or such other date on which an amount of interest is payable by the
     Current Issuer) on the Current Issuer Notes and certain other amounts
     (including an amount equal to the Current Issuer's retained profit) as
     specified in and in accordance with the Current Issuer Priority of
     Payments as calculated by the Current Issuer Cash Manager on the
     Distribution Date that immediately precedes such Payment Date and
     communicated by the Current Issuer Cash Manager to the Agent Bank by the
     close of business on such Distribution Date. For the avoidance of doubt,
     amounts paid by Funding to the Current Issuer pursuant to this Clause 4.2
     shall constitute payment of interest on the Current Issuer Intercompany
     Loan.

4.3  Interest Periods: The first Interest Period shall commence on (and
     include) the Closing Date and end on (but exclude) the Payment Date
     falling in September 2004. Each subsequent Interest Period shall commence
     on (and include) a Payment Date and end on (but exclude) the following
     Payment Date.

5.   Repayment

5.1  Payment subject to terms of the Current Issuer Cash Management Agreement:
     The terms and conditions of this Clause 5 are to be read in conjunction
     with the provisions of Part 4 of Schedule 2 to the Current Issuer Cash
     Management Agreement, as the same may be amended or varied from time to
     time in accordance with the provisions thereof.

5.2  Repayment: Subject to Clause 4 of the Intercompany Loan Terms and
     Conditions, on each Payment Date Funding will repay to the Current Issuer
     for same day value to the Current Issuer Sterling Account an amount of
     principal equal to the amount of principal required by the Current Issuer
     on such Payment Date (or such other date on which an amount of principal
     is payable by the Current Issuer) to fund (by payment to any Swap
     Provider or otherwise) the amount payable by the Current Issuer on such
     Payment Date (or such other date on which an amount of principal is
     payable by the Current Issuer on the Current Issuer Notes) on the Current
     Issuer Notes, as determined by the Current Issuer Cash Manager under the
     terms of the Current Issuer Cash Management Agreement on the Distribution
     Date that immediately precedes such Payment Date and communicated by the
     Current Issuer Cash Manager to the Agent Bank by the close of business on
     such Distribution Date.

5.3  Acknowledgement of New Intercompany Loans: The Current Issuer hereby
     acknowledges and agrees that Funding has entered into Previous Issuer
     Intercompany Loan Agreements with Previous Issuers and that from time to
     time Funding may enter into other New Intercompany Loans with New Issuers
     and that the obligation of Funding to repay this Current Issuer
     Intercompany Loan will rank pari passu with the obligations of Funding to
     repay the Previous Issuer Intercompany Loans and any New Intercompany
     Loans, other than in respect of the priority made in the allocation of
     principal receipts to an Issuer which has issued Money Market Notes.


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6.   Certain Fees, etc.

6.1  Fee for provision of Current Issuer Intercompany Loan: In addition to the
     interest and principal payments to be made by Funding under Clauses 4 and
     5, respectively, on each Payment Date (or, in respect of the payment to
     be made as set forth in (a) below, on the Drawdown Date) or on any other
     date on which the Current Issuer notifies Funding, Funding shall pay to
     the Current Issuer for same day value to the relevant Current Issuer
     Transaction Account a fee for the provision of the Current Issuer
     Intercompany Loan (except that in the case of payments due under
     paragraphs (c), (e), (f) and (j) below, such payments shall be paid when
     due). Such fee shall be an amount or amounts in the aggregate equal to
     the following:

     (a)  the amount payable on the Drawdown Date as previously communicated
          to Funding by the Current Issuer;

     (b)  the fees, costs, charges, liabilities and expenses and any other
          amounts due and payable to the Note Trustee pursuant to the Current
          Issuer Trust Deed or any other Current Issuer Transaction Document,
          together with interest thereon as provided therein;

     (c)  the reasonable fees and expenses of any legal advisers, accountants
          and auditors appointed by the Current Issuer and properly incurred
          in their performance of their functions under the Current Issuer
          Transaction Documents which have fallen due;

     (d)  the fees, costs and expenses due and payable to the Paying Agents
          and the Agent Bank pursuant to the Current Issuer Paying Agent and
          Agent Bank Agreement and the fees, costs and expenses due and
          payable to the Transfer Agent and the Registrar;

     (e)  any amounts due and payable by the Current Issuer to the Inland
          Revenue in respect of the Current Issuer's liability to United
          Kingdom corporation tax (insofar as payment is not satisfied by the
          surrender of group relief or out of the profits, income or gains of
          the Current Issuer and subject to the terms of the Current Issuer
          Deed of Charge) or any other Taxes payable by the Current Issuer;

     (f)  the fees, costs, charges, liabilities and expenses due and payable
          to the Current Issuer Account Bank pursuant to the Current Issuer
          Bank Account Agreement (if any);

     (g)  the fees, costs, charges, liabilities and expenses due and payable
          to the Current Issuer Cash Manager pursuant to the Current Issuer
          Cash Management Agreement;

     (h)  any termination payment due and payable by the Current Issuer to a
          Current Issuer Swap Provider pursuant to a Current Issuer Swap
          Agreement;

     (i)  the fees, costs, charges, liabilities and expenses due and payable
          to the Current Issuer Corporate Services Provider pursuant to the
          Current Issuer Corporate Services Agreement; and


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     (j)  any other amounts due or overdue (including amounts due or overdue
          in respect of stamp duty and issuer, registration and documentary
          taxes or other taxes of a similar nature) by the Current Issuer to
          third parties including the Rating Agencies and the amounts paid by
          the Current Issuer under the Current Issuer Subscription Agreement
          and the Current Issuer Underwriting Agreement (excluding, for these
          purposes, the Noteholders) other than amounts specified in
          paragraphs (a) to (i) above,

     together with, (i) in respect of taxable supplies made to the Current
     Issuer, any amount in respect of any VAT or similar tax payable in
     respect thereof against production of a valid tax invoice; and (ii) in
     respect of taxable supplies made to a person other than the Current
     Issuer, any amount in respect of any Irrecoverable VAT or similar tax
     payable in respect thereof (against production of a copy of the relevant
     tax invoice), and to be applied subject to and in accordance with the
     provisions of the Current Issuer Pre-Enforcement Revenue Priority of
     Payments in the Current Issuer Cash Management Agreement or such other
     Current Issuer Priority of Payments as may apply on that date.

6.2  Set-off: Funding and each of the other parties to this Agreement agree
     that the Current Issuer shall be entitled to set-off those amounts due
     and payable by Funding pursuant to this Clause 6 on the Closing Date
     against the amount to be advanced by the Current Issuer to Funding under
     the Current Issuer Intercompany Loan on the Closing Date.

7.   Additional Covenants

     Funding undertakes to establish the Current Issuer Liquidity Reserve
     Fund, and an appropriate ledger therefor, on behalf of the Current Issuer
     should the long-term, unsecured, unsubordinated and unguaranteed debt
     obligations of the Seller cease to be rated at least A3 by Moody's or A-
     by Fitch (unless Moody's or Fitch, as applicable, confirms the then
     current ratings of the Current Issuer Notes will not be adversely
     affected by such ratings downgrade). Any such Current Issuer Liquidity
     Reserve Fund and such Current Issuer Liquidity Reserve Ledger shall be
     established and maintained in accordance with the provisions of the Cash
     Management Agreement.

8.   Declaration of Trust

     The Current Issuer declares the Security Trustee, and the Security
     Trustee hereby declares itself, trustee of all the covenants,
     undertakings, rights, powers, authorities and discretions in, under or in
     connection with this Agreement for the Current Issuer Secured Creditors
     in respect of the Current Issuer Secured Obligations owed to each of them
     respectively upon and subject to the terms and conditions of the Current
     Issuer Deed of Charge.

9.   Addresses

     The addresses referred to in Clause 18.4 (Notices) of the Intercompany
     Loan Terms and Conditions are as follows:


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     The Security Trustee:

     For the attention of:     Corporate Trust (Global Structured Finance)

     Address:                  The Bank of New York
                               48th Floor, One Canada Square
                               London E14 5AL

     Facsimile:                +44 207 964 6061 / +44 207 964 6399

     The Current Issuer:

     For the attention of:     The Company Secretary

     Address:                  Granite Mortgages 04-2 plc
                               Fifth Floor
                               100 Wood Street
                               London EC2V 7EX

     Telephone:                +44 207 606 5451

     Facsimile:                +44 207 606 0643

     Funding:

     For the attention of:     The Company Secretary

     Address:                  Granite Finance Funding Limited
                               69 Park Lane
                               Croydon CR9 1TQ

     Telephone:                +44 20 8409 8888

     Facsimile:                +44 20 8409 8911

     Rating Agencies:

     Moody's:                  Moody's Investors Services Limited
                               2 Minster Court, 1st Floor
                               Mincing Lane
                               London  EC3R 7XB

     For the attention of:     Head of Monitoring Group, Structured Finance

     Telephone:                +44 207 772 5434

     Facsimile:                +44 207 772 5400

     S&P:                      Standard and Poor's
                               20 Cannon Square
                               Canary Wharf
                               London  E14 5LH


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     For the attention of:     Andre Vollmann

     Telephone:                +44 20 7176 3855

     Facsimile:                +44 20 7176 3598

     Fitch:                    Fitch Ratings Ltd.
                               Eldon House
                               2 Eldon Street
                               London  EC2M 7UA

     For the attention of:     European Structured Finance Surveillance

     Telephone:                +44 207 417 6271

     Facsimile:                +44 207 417 6262

IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed
on the day and year appearing on page 1.


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                                  SCHEDULE 1

                  CONDITIONS PRECEDENT IN RESPECT OF DRAWDOWN

1.   Authorisations

     (a)  A copy of the memorandum and articles of association and certificate
          of incorporation of Funding.

     (b)  A copy of a resolution of the board of directors of Funding
          authorising the entry into, and the execution and performance of,
          each of the Current Issuer Transaction Documents to which Funding is
          a party and authorising specified persons to execute those on its
          behalf.

     (c)  A certificate of a director of Funding certifying:

          (i)  that each document delivered under this paragraph 1 of Schedule
               1 is correct, complete and in full force and effect as at a
               date no later than the date of the Current Issuer Intercompany
               Loan Confirmation and, if such certificate is dated other than
               on the Drawdown date, undertaking to notify the Current Issuer
               (with a copy of such certification to the Security Trustee) if
               that position should change prior to the Drawdown Date; and

          (ii) as to the identity and specimen signatures of the directors and
               signatories of Funding.

2.   Security

     The Current Issuer Deed of Accession duly executed by the parties
     thereto.

3.   Legal opinion

     Legal opinions of:

     (a)  Sidley Austin Brown & Wood, English legal advisers to the Seller,
          the Current Issuer and Funding, addressed to the Security Trustee;

     (b)  Sidley Austin Brown & Wood LLP, U.S. legal advisers to the Seller,
          the Current Issuer and Funding, addressed to the Security Trustee;
          and

     (c)  Tods Murray LLP, Scottish legal advisers to the Seller, the Current
          Issuer and Funding, addressed to the Security Trustee.

4.   Transaction Documents

     Duly executed copies of:

     (a)  the Current Issuer Deed of Charge;

     (b)  the Current Issuer Trust Deed;


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     (c)  the Cash Management Agreement;

     (d)  the Global Note Certificates;

     (e)  the Current Issuer Corporate Services Agreement;

     (f)  the Current Issuer Currency Swap Agreements;

     (g)  the Current Issuer Basis Rate Swap Agreement;

     (h)  the Bank Account Agreement;

     (i)  the Collection Bank Agreement;

     (j)  the Master Definitions Schedule and the Current Issuer Master
          Definitions Schedule;

     (k)  the Current Issuer Paying Agent and Agent Bank Agreement;

     (l)  the Current Issuer Start-up Loan Agreement;

     (m)  the Mortgage Sale Agreement;

     (n)  the Mortgages Trust Deed;

     (o)  the Administration Agreement;

     (p)  the Mortgages Trustee Guaranteed Investment Contract;

     (q)  the Funding Guaranteed Investment Contract;

     (r)  the Funding (Current Issuer) Guaranteed Investment Contract;

     (s)  the Current Issuer Post-Enforcement Call Option Agreement;

     (t)  the Current Issuer Subscription Agreement;

     (u)  the Current Issuer Underwriting Agreement;

     (v)  the Seller Power of Attorney;

     (w)  the Funding Deed of Charge;

     (x)  the Current Issuer Cash Management Agreement;

     (y)  the Funding (Current Issuer) Bank Account Agreement;

     (z)  the Current Issuer Bank Account Agreement;

     (aa) the Second Priority Funding Deed of Charge;

     (bb) the Stand-by Bank Account Agreement;


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     (cc) the Stand-by Mortgages Trustee Guaranteed Investment Contract; and

     (dd) the Stand-by Funding Guaranteed Investment Contract.

5.   Bond Documentation

     (a)  Confirmation that the Current Issuer Notes have been issued and the
          subscription proceeds received by the Current Issuer; and

     (b)  Copy of the Prospectus and the Offering Circular.

6.   Miscellaneous

     A solvency certificate from Funding signed by two directors of Funding in
     or substantially in the form set out in Schedule 2 (Solvency Certificate)
     to the Intercompany Loan Terms and Conditions.


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                                EXECUTION PAGE

Funding

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<CAPTION>

<S>                                                                      <C>
Executed by
GRANITE FINANCE FUNDING LIMITED
as follows:                                                                By
Signed for and on its behalf by one of its duly authorised                   ------------------------------------------------------
attorneys/signatories                                                        Duly Authorised Attorney/Signatory

                                                                         Name
                                                                             ------------------------------------------------------


The Current Issuer

Executed by
GRANITE MORTGAGES 04-2 PLC
as follows:                                                                By
Signed for and on its behalf by one of its duly authorised                   ------------------------------------------------------
attorneys/signatories                                                        Duly Authorised Attorney/Signatory

                                                                         Name
                                                                             ------------------------------------------------------


The Security Trustee

Executed by
BANK OF NEW YORK
as follows:                                                                By
Signed for and on its behalf by one of its duly authorised                   ------------------------------------------------------
attorneys/signatories                                                        Duly Authorised Attorney/Signatory

                                                                         Name
                                                                             ------------------------------------------------------


The Agent Bank

Executed by
CITIBANK, N.A.
as follows:                                                                By
Signed for and on its behalf by one of its duly authorised                   ------------------------------------------------------
attorneys/signatories                                                        Duly Authorised Attorney/Signatory

                                                                         Name
                                                                             ------------------------------------------------------
</TABLE>



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