New homeowners mainly finance their furnishing costs from savings and through loans from family members, with about a quarter claiming to have borrowed enough money to cover these costs at the time of taking out their mortgage, according to a Bank of Ireland survey.

In a move designed to capture the business of first-time buyers with a shortfall, the bank has announced it will pre-approve mortgage customers for overdrafts, personal loans with repayment terms of up to five years and a gold credit card.

These products are available to eligible first-time buyers and those trading up, subject to their capacity to repay, for up to three months after they receive their mortgage cheque without the need for them to make subsequent applications.

"When you move into a new home, you're hit with so many expenses at once," says Ms Olive Moran, marketing manager for Bank of Ireland mortgages. "Most people think they can't come back to the bank because they have just got their mortgage."

The bank is keen to emphasise that the three-in-one pre-approval is not irresponsible lending. "Bank of Ireland will adhere to its prudent lending policy and will ensure that any lending approved is within its customer's personal financial comfort zone," says Ms Moran.

But mortgage advisers have expressed concern that the bank is encouraging additional debt just at the point when first-time buyers are adjusting to the financial commitment of a mortgage.

"What happened to 'making do' until you can afford to upgrade?" asks Ms Sarah Wellband of mortgage intermediary REA.

The interest charged on Bank of Ireland's overdrafts is currently 13.5 per cent, while the annual percentage rate of interest on its Gold Advantage credit card is 14.3 per cent, compared with the market leading rate of 12.9 per cent APR on Ulster Bank's zinc card.

Rates on Bank of Ireland's personal loans for smaller amounts are 9.6 per cent for €1,000-€2,999 and 9.3 per cent on sums between €3,000 and €6.499, if the loan is applied for through its online and telephone banking services. Lower rates apply to higher loans.

A much cheaper, albeit riskier, way for homeowners to finance home improvements is by extending their mortgage so that interest on the borrowings is charged at home loan rates.

Bank of Ireland's standard variable rate is 3.6 per cent, 0.3 of a percentage point higher than the cheapest home loan provider in that category - AIB - but a less intimidating rate than its shorter-term credit options.

However, top-up mortgages are only available two years into the life of the mortgage, Ms Moran says.

First-time buyers will not usually have the repayment capacity to extend their mortgage while they are still furnishing their property.

"Most people borrow up to the maximum advance of 92 per cent of the property value and often to the maximum their incomes allow as well, so it's normally a year or two before there is sufficient equity or income to allow a top-up," explains Ms Wellband.

These people, presumably, will not qualify for a loan or credit card pre-approval.

"Once they have a track record with a lender it's fairly easy to get a top-up, although lenders aren't keen on multiple debt consolidation," she adds.

Debt consolidation is where homeowners borrow more against the value of their home in order to pay off higher interest loans and significant amounts of credit card debt - an option some Bank of Ireland customers who make use of the pre-approvals may wish to avail of a few years down the line.

If borrowers seek to repay more than four different types of debt under their home loan, it suggests they are living beyond their means, Ms Wellband says.

Mr Tice O'Sullivan, financial adviser at online intermediary Primafinance.ie, agrees that a year and preferably two should pass before considering a top-up to clear credit cards and personal loans.

"Banks will tend to look suspiciously at cases where equity release is requested within a year," he says, "unless there was a large downpayment made when the house was bought and there are legitimate reasons for the release, for example purchasing an investment property."