Over the next few weeks, thousands of Irish living abroad will return to visit their families over the holiday season. Despite notoriously high prices, some may even consider buying property here that they will eventually call home.

Family Money reader Mr F a self-proclaimed exile, working in Germany, says he has considered this option and has even approached Bank of Ireland where he has his personal and commercial accounts, credit card and car loan. Mr F has a three-year ongoing relationship with the bank and told his account manager he hoped to buy a property in Ireland and rent it out for a few years before he returns.

Much to his dismay, he was told: "Since I cannot give a definite return date, the bank's policy would not permit offering me a personal mortgage in these circumstances. A commercial loan might be a possibility, but with commercial rates".

REA Mortgage Services' Ms Sarah Wellband was surprised by our reader's dilemma. "We've done a number of mortgages with people from Russia and Bermuda to the UK. As long as he can prove his income and can show rental income it shouldn't be a problem for a lender," she said.

Expats may pay 0.25 to 0.50 per cent above standard lending rates initially, but when they return it should revert to the normal rate. "The lender normally requires that the rent from the property is paid into an account with them," said Ms Wellband.

Lenders prefer if someone is working for a multinational, she says. "If they're self-employed or income is not easily quantifiable he may have a problem. Most lenders are willing to lend to Irish nationals with a view to letting the property and then coming back," she said.

Our reader would be subject to the normal criteria for mortgage lending: income, outgoing, rental income and the location of the property.

An alternate form of financing is to raise the money in Germany. "I'd be surprised if he'd raise it unless he has a property there he could remortgage. It would make most sense to raise the mortgage here," said Ms Wellband.

A Bank of Ireland spokesman says home loans were granted to Irish residents who wanted to purchase and live in a house here. For those in a different situation, such as our reader, a residential investment loan was available. If living abroad and intending to come back within a year, customers could borrow up to 90 per cent of the property's value. If not intending to return immediately, the expat could borrow up to 75 per cent of the value.

At the time of writing, Bank of Ireland's variable and fixed residential loan rate was 4.89 per cent versus a rate of 4.35 per cent for a regular home loan.

The rates are different because the residential loan is for investment purposes and represents a different risk situation for the bank, says the spokesman.

Lending decisions are "linked to where people are in the jurisdiction. There are legal issues involved when people live abroad so we would look at each case on an individual basis", he said. Similarly, "if someone here wants to buy abroad we don't have a particular product for them but we'd look at their situation on an individual basis".

There are tax issues to consider when buying a home and renting it out as a landlord living outside the State, says PricewaterhouseCooper's global human resources solutions manager, Ms Anne Bolster.

The reader will be liable to taxes in the Republic on any rental profit. It is also possible he may be liable for German taxes as well. However, he would be subject to relief under the double taxation treaty so he will only pay taxes once, she said.

"As a non-resident landlord the tenant is obliged to withhold tax at 24 per cent and make a net deposit to the landlord. Therefore, once a year the tenant is obligated to declare and pay the tax to Revenue," said Ms Bolster.

If the non-resident landlord has an agent in the Republic the tenant is not obliged to withhold tax. The agent will be assessed in the name of the non-resident landlord. An agent does not have to be a real estate agent or solicitor, they may be anyone resident in the Republic, she said.

Despite our reader's experience, the Bank of Ireland is one of the few institutions developing financial services for expatriates. The bank's FSharp business is an offshore Internet bank that gained regulatory approval in late July. The product went live in September and targets Irish and British expatriates who want a high-tech, 24-hour banking service. It will provide a full range of deposit and fund management services as well as credit and debit cards to allow easy access to funds.

Research commissioned by the bank estimated that there were 1.7 million British and Irish expats with assets of £15,000 (€19,047) or more. The bank believes most of these individuals are already familiar with the Internet and many have a need for offshore banking services.

Customers may conduct all their banking business online, although they must initially fill in and return a paper form to establish the account, as the bank needs to be sure of who is setting up the account.

FSharp offers fund management facilities from Mercury Asset Management and Bank of Ireland Asset Management, a debit card from Standard Chartered and a credit card run by its own card services operations. KPMG will provide tax advice.

For those thinking of moving home, the annually updated book Living and Working in Ireland by Eugenie Houston provides some valuable insights. Websites such as recruitment specialist Marlborough Group's www.marlborough.ie/ offer useful annual salary surveys. PricewaterhouseCoopers site, www.pwcglobal.com/ie, is also very helpful.