THOUSANDS of borrowers who took out a mortgage with The Northern Rock are in line for big compensation payouts after a High Court ruling.

Around 41,000 customers could receive an average payout of more than £6,000 after a ruling that the wording of loan documents for the former bank's Together mortgage were wrong.

The judgement leaves British taxpayers - who took on the defunct institution's bad debt - facing a potential bill for £258m.

The High Court ruling released today was against Northern Rock Asset Management (NRAM), the "bad bank" of Northern Rock that was nationalised in 2008 and is now part of the taxpayer-owned UK Asset Resolution (UKAR).

The Rock's controversial 'Together' mortage offered customers an unsecured loan of up to £30,000, as well as a mortgage, which could be repaid over the lifetime of the mortgage.

Although thousands of customers took out the loans, a judge at London's High Court said documents relating to loans of between £25,000 and £30,000 taken out from 1999 tyo 2008 were incorrect. As a result, the court ruled customers should be repaid interest and fees.

UKAR's Chief Executive Richard Banks said: "We are now considering the impact of the judgement and taking legal advice on whether to appeal. Customers do not need to act at this stage. If any redress becomes due, we will write to all those affected to advise on next steps."

The judgement could prompt other banks to review the wording on their mortgage applications - leading to further windfalls for borrowers.