Paying back a mortgage, like seeing the taxman turn a nice gross income into a much smaller net one, is never going to be much fun.

But for anyone who wants to put their name on the deeds instead of a tenancy agreement, a mortgage is an unavoidable cost, and one that has become more of a burden as a result of the steady upward creep of European Central Bank (ECB) interest rates over the past year.

Last week's Budget offered some respite for first-time buyers, however, as Minister for Finance Brian Cowen announced a doubling in the ceiling on the annual mortgage interest eligible for tax relief for first-time buyers from €4,000 to €8,000 for single people and from €8,000 to €16,000 for married couples.

In practical terms, this means that a single person who is in the first seven years of his or her mortgage will now receive a monthly tax credit of up to €133. Before, the maximum credit was €66 a month.

So how does the tax relief on mortgage interest payments work?

The relief is granted at the standard rate of tax of 20 per cent. This means that first-time buyers will get back 20 per cent of whatever interest they pay in the form of a tax credit, up to a maximum of €1,600 a year for a single person and €3,200 for a married couple.

People who hold smaller mortgages won't benefit fully because the amount of interest they pay on their mortgage every year happily falls shy of the €8,000/€16,000 ceiling.

A mortgage repayment is usually broken down into two parts: the repayment of a sliver of the initial sum borrowed - the principal - and the interest charged.

Over the years, the interest component of the monthly repayment falls because greater chunks of the outstanding principal have been paid off. So mortgage holders who initially qualify for the full value of the credit may see that credit reduced as time goes by.

At the same time, however, the interest rates charged by mortgage lenders are increasing in line with the ECB's base rate.

This, unhappily, makes the interest component of the repayment higher, but it also means that more people will benefit from a greater slice of the interest tax relief.

After seven years, the interest ceilings on which tax relief is available falls to €3,000 for a single person and €6,000 for married mortgage holders.

These ceilings increased from €2,540 and €5,080 in the Budget and mean that the maximum monthly tax credit available to these mortgage holders is €50 for a single person and €100 for a married couple.

The Budget move has led to a flurry of homeowners checking to see if they are receiving their entitlement of mortgage interest tax relief - at €1,600 a year, the relief is now almost as valuable to a single person as their personal tax or PAYE credit.

Under a system known as "tax relief at source", or TRS, mortgage lenders pass on the value of the tax relief by reducing the amount of the monthly repayment or by lodging a monthly credit to the account from which customers make their repayments.

Although the tax relief has been available at source since January 1st, 2002, not everyone who is entitled to it gets it.

First-time buyers are obliged to sign and counter-sign so many documents around the time they draw down their mortgage that tax relief documentation sometimes gets lost in the paper tray.

Homeowners who are not receiving their entitlement to mortgage interest relief should fill out the Revenue form TRS 1, giving their Personal Public Service (PPS) number and their mortgage account number.

The lender should supply this form at the time the loan is taken out, but it is also available from the Revenue itself and can be downloaded from www.revenue.ie.

The Revenue says homeowners should be prepared to wait eight weeks for the tax relief to be applied to their account. If after more than a few months there is still no credit coming through, it may be worth contacting your local tax office.

Joint borrowers who are not married are both entitled to tax relief in their own right, even where the payment is made in full by just one of the borrowers, which might often be the case for practical purposes; if the two names are on the loan agreement, both parties qualify and should fill out separate TRS 1 forms. Married couples can use the same form, giving both PPS numbers.

In some cases, only one of the borrowers in a couple may be entitled to the higher ceiling, because the other borrower previously held another mortgage and has now lost first-time buyer status.

First-time buyer status remains for seven years even if borrowers sell their starter home and buy another property within this period, remortgaging in the process. This is only the case regarding mortgage interest relief; in terms of stamp duty they are no longer first-time buyers.

Tax relief is not just available on mortgages used to buy property - it is also applied to sums borrowed to "repair, develop or improve" the family home. But homeowners who release equity or take out top-up loans often do so for a variety of reasons. For example, they might extend their €200,000 mortgage by €100,000, but only €70,000 of this is used to build an extension to their house.

Another €20,000 might be used to consolidate a car loan or credit card debt, and a further €10,000 for a holiday. This interest on this €30,000 part of their mortgage does not qualify for tax relief. The onus is on the customer to tell the Revenue what proportion of their borrowings qualifies for the relief.