A group of 150 homeowners is suing Lloyds Banking Group for an alleged loss of thousands of pounds, the Financial Times reports.

The case centers around shared appreciation mortgages, the late-90s product whereby a homeowner could take a loan out against their house with the proviso of having to pay the bank back a percentage of the property’s equity once it was sold.

Some borrowers took out 25% of the value of their homes, under the condition they repaid 75% of any appreciation that occurred.

The law firm fighting Lloyds, Teacher Stern, cites one example where a claimant took out a £187,000 loan against their £750,000 property in 1998, which has since risen to £2.8m in value – footing the owner with a bill of £1.6m if they wish to sell.

The case argues that the equity percentage agreed to be paid back is “grossly excessive” and that they are trapped in their homes “until death”, with house price appreciation having been so rapid over the last two decades.

Teacher Stern says that under the terms of the Consumer Credit Act, the deals were “inherently unfair” and the products “fundamentally unsuitable”.

Bank of Scotland, being a part of Lloyds, argues that the case is based on hindsight and that the bank risked house depreciation when the deals were made.

The claimants wish to see the agreements of the deal removed or altered to a lower rate.

Teacher Stern settled a similar case with Barclays Bank on behalf of 37 clients in June of this year.

The case will be heard next month.