By doing so, lenders could be adding an extra £150 onto the loan each year on an average £150,000 loan - more so in times of higher rates.
Giraffe Money, Bristol & West, Leeds Building Society and West Bromwich Building Society have all been singled out as engaging in this practice.
On a typical £150,000 loan a borrower on the standard variable rate of 7.34 per cent would pay £12.77 extra a month on annual calculations.
This works out at a higher rate because lenders calculate repayments at the start of the year based on the amount outstanding at the time, instead of making adjustments as the year goes on.
Francis Ghiloni, mform.co.uk’s marketing and business development director, said: “Lenders say they cannot move to daily calculations of interest because of systems issues, however 80 per cent of lenders have managed to do so.
"Not all the lenders who still use annual calculations are small regional building societies who need to keep costs down."
She advised: “Many borrowers will be unaware of the effect of calculating interest annually instead of daily but it all adds to the true cost of a mortgage and is something they should be aware of.”
Barnsley, Bank of Ireland, Bath, Buckinghamshire, Catholic, Chorley & District, Dunfermline, Earl Shilton Building Society, National Counties, Holmesdale, Nottingham, Progressive, Vernon and Chesham complete mform.co.uk's line up of culprits.
