Tens of thousands of mortgage holders with Lloyds, Halifax and Bank of Scotland are in line for a £20 redress payment after the bank identified that mortgage payments weren’t applied correctly, meaning customers had paid too much interest.

The issue, dating back to 2010, affected those who may have chosen to overpay their mortgage, pay weekly or make one-off payments, so any other deposit other than the regular monthly mortgage amount.

Halifax said that for the majority of customers, the issue meant they overpaid by less than £10, but it has written to affected customers letting them know to expect redress of £20.

If a customer still holds their mortgage with the banks, the £20 will be credited directly to their account.

If they’re no longer a customer, Halifax said it’s made every effort to identify the current addresses of former mortgage holders so a cheque can be sent. Cheques need to be cashed within six months but Halifax added that a new one can always be issued.

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A Halifax spokesperson, said: “We have identified a small number of mortgage customers whose payments were not applied correctly, meaning they may have paid slightly more than they should in interest. We have written to impacted customers to apologise and make a payment of £20 to ensure no financial detriment.”

The issue was first reported on MoneySavingExpert after a reader contacted the consumer champion asking if the redress letter from Halifax was a scam.