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Funding & capital markets
FUNDING & CAPITAL MARKETS
A diversified funding platform
Pepper Money UK is a specialist mortgage lender focused on financial inclusion
and responsible lending. Our mission is to provide flexible mortgage solutions for
customers turned away by the high street.
Our mortgage originations are supported by a diversified funding platform. That includes warehouse financing,
forward flow agreements, seed pool sales, and public and private securitisations.
OUR PROGRAMMES
Two established UK securitisation shelves
Polaris RMBS Programme
residential and buy to let mortgages. We issue regularly across the cycle to support origination
growth and provide investors with a consistent, well‑understood shelf.
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Asset class
Polaris transactions are backed by UK First Charge residential and buy to let mortgages originated by Pepper Money. These loans reflect our specialist‑lending focus and typically feature:
- Non-standard income profiles, including self-employed borrowers, complex income, or multiple income sources
- Credit-impaired or credit-rebuilding customers, assessed individually rather than via automated high-street scorecards
- Owner-occupied and BTL loans underwritten using a consistent, credit-first framework
- Fully underwritten, case-by-case applications, ensuring borrower circumstances, credit behaviour and affordability are thoroughly understood.
These characteristics produce collateral pools with stable performance across economic cycles. This is reflected in strong excess spread and historically low arrears across recent Polaris shelves.
Underwriting approach
We apply a conservative, credit‑first underwriting approach designed to produce stable, predictable collateral performance.
- Case-by-case credit assessment for non-standard borrowers, ensuring we fully understand affordability and credit behaviour.
- Affordability-driven decisioning, with enhanced review where affordability is tighter – supporting resilience under stress scenarios.
- Owner-occupied and BTL loans underwritten using a consistent, credit-first framework.
- Portfolio-level analysis for landlords, including geographic concentration, cashflow sustainability and borrower experience.
This disciplined approach has contributed to strong excess spread and historically low arrears across Polaris transactions.
Servicing approach
All loans in Polaris are serviced by Pepper Advantage, the servicer used across Pepper’s UK securitisation platform. This maintains consistency across the credit lifecycle. Benefits include:
- Early intervention and proactive arrears management through in-house specialists.
- Active monitoring of payment behaviour and arrears trends.
- Strengthening of reporting controls to ensure accurate loss and repossession data across RMBS structures.
The combination of conservative origination and specialist servicing has supported stable performance across all recent Polaris shelves.
Risk retention
- Pepper Money complies with all applicable US and UK/EU risk-retention rules via UKRML as the transaction sponsor.
- Minimum 5% vertical slice retained across all note classes and certificates for the required duration.
- Full sponsor responsibility for inclusion and maintenance of required disclosures in deal documentation.
We have a commitment to programme integrity, ensuring the retained economic interest isn’t hedged or transferred except as permitted.
Castell RMBS Programme
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Asset class
Castell transactions are backed exclusively by UK Second Charge residential mortgages originated by us.
These loans typically feature:
- Complex income or credit profiles.
- Debt-consolidation and borrower-led refinancing use-cases.
- Lower average balances and higher seasoning relative to first-lien programmes.
- Manually underwritten cases drawn from customers underserved by high-street automated models.
This produces collateral pools with stable performance characteristics. Which is demonstrated through low arrears and strong excess spread across previous Castell shelves.
Underwriting approach
Pepper Money applies a conservative, credit‑first underwriting philosophy across both First and Second Charge originations – creating consistency across Castell and Polaris. Key features include:
- Manual, case-by-case credit assessment, ensuring borrower behaviour, income stability and repayment capacity are fully understood.
- Affordability-driven decisioning, with enhanced review where affordability margins are tighter.
- Behavioural and credit-history analysis, particularly relevant for non-standard customers consolidating higher-cost debts.
This disciplined approach has historically contributed to robust excess spread and low arrears in Castell transactions.
Servicing approach
All loans backing Castell transactions are serviced by Pepper Advantage. The servicing model is designed to preserve collateral performance through the cycle:
- Early intervention and proactive arrears management through in-house specialists.
- Active monitoring of payment behaviour, arrears trends, and cure rates.
- Consistent reporting controls to ensure accurate performance data across RMBS structures.
This servicing framework has supported the stability of Castell pools – including those that have been called and re-securitised into subsequent shelves.
Risk retention
Pepper Money complies with all applicable UK/EU and US risk‑retention requirements for the Castell programme via UKRML as the transaction sponsor. This includes:
- Minimum 5% vertical slice retention across all issued note classes and certificates.
- Full sponsor responsibility for maintaining required ongoing disclosures.
- Commitment not to hedge or transfer the retained economic interest except where explicitly permitted.
This alignment of interest reinforces programme integrity and is a key component of investor confidence in the Castell shelf.