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A former sub prime, mortgage lender is offering an 8% discount to its borrowers if they redeem their loans early.

Edeus, which started up in early 2006, is making a cashback offer to over 400 customers and may extend to the rest of their customers if it proves popular.

The mortgage lender wants to get the loans off its books but can not find an investor willing to buy.

A spokesperson admitted the idea sounded strange but it was far cheaper than selling the loans in the normal fashion

The spokesperson, also stated this would mean making a loss on each mortgage.

Over the last year the only way we have been able to raise fresh funds is by offering steep discounts to multi-national banks.

So instead of offering that to the banks we are going to be dealing with customers directly.

Edeus is also willing to waive its early redemption charges and exit fees, but people will have to pay any set up fees that will be demanded by a new mortgage lender.

Edeus are no longer offering mortgages to new customers.

The market for selling on mortgages is almost dead, and they can be sold only at a very discounted price.

Earlier this year several other sub prime lenders which had relied on this business model withdrew from the market and closed down.

In the last week or so a number of lenders including Halifax, Abbey, Cheltenham & Gloucester, Nationwide BS and Woolwich have all started to reduce their rates.

This  has resulted in the average two year fixed rate falling back below 7%.