The holiday home is no longer the preserve of the fortunate few. There's an increasing amount of cash in the economy and lots of it is finding its way into the booming holiday home market.

Some people buy simply with the idea of having somewhere to go with the kids every summer, and as an occasional weekend retreat, while others plan to rent out part of the time before later selling so that somewhere can be bought whenever their children go to college.

And of course with increasing demand comes large price rises. Holiday homes are no small expenditure. In last week's Irish Times Property Supplement, a remote two-bedroom cottage in Connemara was advertised between £180,000 and £200,000. More elaborate ones, such as Mutton Island, can cost over £1 million.

Some banks are reportedly lending staff money for holiday homes at very close to market rates and certainly well below the levels on offer for standard variable rates.

But few will have any difficulty persuading a lender to lend for a second home. And, for many, a mortgage on a holiday home can be obtained for 100 per cent of the finance. Many families who have owned their own homes for 10, or in some cases even five years, have a large amount of equity. Few lenders who will turn away anyone for a £150,000 loan who has £300,000 of equity in their home. Of course, those without large amounts of equity are unlikely to secure 100 per cent funding.

Lenders used to charge additional interest for second and subsequent homes but competition has eliminated that. The one difference between buying a holiday home and a family home is insurance. Premiums can be significant if you are either going to let it or leave it unoccupied for long periods.

Lenders say that most mortgages for holiday homes are for those in their 30s or their 50s. The fiftysomethings are primarily interested in somewhere to retire, with a possible rental income for part of the time. The thirtysomethings are more interested in a long-term investment as well as having some place to go with young children.

It is estimated that between 40 and 64 per cent of all houses in Connemara are holiday homes. This trend is exacerbated by the seaside resorts renewal package, which gives investors tax relief on buying a home in certain areas, again driving up prices not only for those looking to buy a second home but also for local people.

Since it was started in July, 1995, the tax relief scheme has proved very popular with investors and with banks, which are often keen to lend money on what they feel is a sound investment.

Despite the fact that tax relief has now been pulled back substantially, investors are still queueing for many of the schemes. Most of them are highly paid PAYE workers who use the scheme to offset large parts of their tax liability. They can set off 50 per cent of costs against income in year one and 5 per cent each year thereafter for a period of 10 years.

But a major problem with these holiday homes is that you cannot simply visit whenever you like. They must be available for rent through Bord Failte from April through to October. This letting out period lasts 10 years, with no one person allowed to occupy the house for more than two consecutive months, or more than six months, in any year.

Owners who sell before the 10 year period is up are liable to pay back the tax benefits.

It is not just Ireland where people are looking for holiday homes. Increasing numbers are investing in Spain and Florida. Lenders now look quite favourably on Spain, as there is no exchange rate risk and they will also consider property in Florida if it is going to be rented out fairly continuously. Although you do have to remember that no one really has any idea what the relationship between the euro and the dollar will be over time. Buyers should also remember that in Spain there is fairly draconian legislation in place which allows an owner's debts to transfer with property and can result in appropriation and sale by judicial order.