A major mortgage blunder by AIB has left thousands of families out of pocket, with some ending up overdrawn.

According to today's Irish Independent the error is costing families up to €375 each and the State-owned bank is refusing to immediately rectify its mistake.

Instead, the bank is insisting on repaying the money over the remainder of the year.

It's believed the error was caused when AIB failed to apply mortgage interest relief to repayments.