The property obsession that has gripped the Irish market has created a damaging new syndrome called property envy. It involves behaviour such as drooling over the property section, looking in people's windows and putting the neighbours under surveillance when they are selling their house.

Many people are now suffering from this condition and it is causing some victims to twist themselves into unhealthy financial contortions to get a better address.

This category of people are not as desperate as first-time buyers but there is a sense of urgency in their desire to cash in on their property. But as prestigious houses sell for ever higher prices, there's a danger that they will trade up a street too far.

With this current climate some financial institutions are raising the profile of pension-backed residential mortgages which traditionally have never had a high take-up in the State.

On paper, pension mortgages are an attractive proposition and they are ideally suited to some high-earning individuals with substantial future earning potential.

So what's the problem? Well, it cannot be emphasised strongly enough that this type of mortgage is only suitable for a minority of people. The danger is that those whose finances do not suit such schemes, will link their homes to the stock market through a pension, leaving themselves open to serious financial heartache in later life.

This is a financial planning issue rather than a mortgage issue so it is important to have a financial adviser. Mr Eddie Hobbs, finance director and spokesman for the Consumers' Association of Ireland has strong views on the subject.

"Taking out a pension-backed mortgage is a serious decision which requires much more than transaction-only advice. You are essentially working out which is the best way to arrange your entire assets and liabilities for the rest of your life," he said.

Mr Hobbs sees moves by Eagle Star to create discussion on the subject of pension mortgages as an ominous sign. But Mr Brendan Johnston, pensions director with Eagle Star says it was clearly understood in the industry that these mortgages would not be promoted to everyone.

"It's a sophisticated financial arrangement so it's really only suitable for those who are over 40, reasonably wealthy and able to avail of independent financial advice," Mr Johnston said.

With a pension-backed mortgage the borrower makes monthly repayments on the interest only for the term of the loan. This leaves the capital sum, which is the full amount borrowed, outstanding at the end of the term. With a regular annuity or repayment mortgage, the monthly repayments comprise the capital plus interest.

With the interest-only mortgage the borrower has significantly lower monthly repayments but still owes a lump sum at the end. The vehicle used to pay off the lump sum is a pension fund (with an endowment mortgage the lump sum is paid off with an endowment policy).

The borrower also pays a monthly amount into a pension fund for the same term as the mortgage, say 20 years, and uses the tax-free lump sum at the end to pay off the mortgage. It aims to use up the tax relief available for pension contributions and make the most of the tax-free lump sum at the end. The borrower can also claim mortgage interest relief for the full term of the loan.

According to financial advisers, so far most pension mortgages have been taken out to help finance a commercial property. The loan is usually taken out for 20 to 25 years which coincides, ideally, with the retirement date of the borrower.

In the event that there is a shortfall in the pension payout at the end, the borrower, who is typically self-employed and has other assets, will find the money elsewhere.

Pension mortgages can also be arranged for residential mortgages but someone who is not on the road to being independently wealthy should not even consider this repayment structure for their family home, especially if it is their only asset.

There are finer points within the pension mortgage package. It is possible that the pension fund will deliver poor returns just before the person retires which would reduce the lump sum.

To protect against this eventuality Mr Johnston of Eagle Star recommends a package that moves into low risk in the final years. He also suggests that those in the market for a pension mortgage get the best deal possible by combining products from different providers. It's possible to get the interest-free mortgage from one institution and the pension and term assurance elsewhere.

According to Mr Liam O'Connor of the Irish Mortgage Corporation, the crucial element in choosing a pension mortgage is the initial fact finding. He emphasises that the applicant should be of substantial net worth.

Some financial houses are offering interest-only mortgages but only a limited pool of customers would qualify. The exception is Bank of Scotland, its interest-only mortgages are available to applicants who qualify for the standard repayment mortgage.