THE interest on tens of thousands of mortgages has been miscalculated as a result of a computer glitch, Halifax has said.

Britain's biggest mortgage lender said about 28,000 customers who had taken out mortgages with Leeds Permanent, with which Halifax merged in 1995, had been charged too little interest due to a processing error.

The bank added that about 12,000 mortgage-holders had also overpaid, by a total of £50 on average.

It would be reimbursing those customers in full. It claimed more than 3,000 people should have already received cheques.

The bank added that it was writing off the sums in interest which people had underpaid, which amounted to an average of £175 per person.

The error, which was spotted during an audit earlier this year, was caused by an in-house computer system failing to take into account over-payments and underpayments on mortgages when calculating the interest due.

The fault applies to interest-only mortgages taken out with Leeds before October 1989, and no Halifax mortgages have been affected.

The bank said all mortgages which were still active had been checked and corrected where necessary, and it was now in the process of checking those which had been closed.

Halifax head of mortgages Paul Duffin said: "Our objective is to return every single penny to customers who have been overcharged. We are employing a team of more than 150 people to do so.

"At the same time, we are waiving all underpayments. This is our problem, not our customers."

The group has set up a helpline on 0845 604 1280.