Thursday 29th May 2008

Dear Intermediary,

With continued volatility in our market and money market rates increasing, we have had to review our pricing. The new rates and criteria will be launched on Tuesday 3rd June 2008. Please see updated product guide attached.

Additional Criteria Update

Valuations Criteria
Revised criteria on Minimum Property Value:

• Non Standard Construction Property Types: £100,000
  
• Standard Construction Houses, Private Flats and Maisonettes: £80,000 with a maximum 80% LTV
  

Self-Cert Applications
Being a prudent and responsible lender we will review applications to ensure that there is a reasonable alignment between occupation and income declared. We will review this where income is less than £60,000 for NRM to GEM 1 and less than £40,000 for GEM 2 to GEM 7.

Debt Management Plans
Where an applicant is in or is about to enter into a debt management arrangement the DTIR must be calculated using the contractual monthly payment with each creditor and not the reduced debt management arrangement.

Mortgage / Rental History – Policy reminder
Our current policy requires 12 months proof of payments for all mortgage / rental agreements involving any of the applicants.

Child and Working Family Tax Credits
As of the 20 June 2008 we will require applicants that are using Child or Working Family Tax Credits within their income calculation to confirm that they will be in receipt of this benefit for a further 3 years from date of application.

The igroup Application form is being amended to include this declaration and a further communication will be issued during June to advise of its publication date.

Pipeline

Since the introduction of IDOL (instant decision online), a high proportion of applications submitted have had a decision in principle issued. In order that we have a more managed transition between different product ranges, you will be required to obtain a decision in principle (DIP) for all cases from IDOL prior to submitting a packaged case to us by a given date. This will provide you with a better service at a time of product transition.

So in this instance, all applications on the 1708 range that have not yet been received by ourselves (irrespective of LTV) must have a DIP via IDOL by 5.30pm on 2 June 2008. After this time the plans will no longer be available.

The fully packaged submission deadline for these cases is Friday 13 June 2008. Cases where a material change is required to the DIP and mortgage offers expiring after 20 June 2008 will be subject to re-assessment against the revised criteria.

If you have any questions on the above please contact your National Account Manager, Business Development Manager or our Sales Liaison team on 0845 610 6574.