A lot of posters are confused about this. It may help to google “home reversion” before you read on.
There’s been an energetic debate on here about the objective merits of
mortgaged home ownership, even at the elevated and scarcely sustainable prices of February 2014.
The strongest point the pro side have relates to the post-retirement stage of life. Today, life is definitely better for retirees who own a home than for those who must rent without state assistance. Assuming the same regime continues until 2045, which is a huge stretch, they argue that owning your house upon retirement is the only rational choice.
Now I’ll argue that owning a house upon retirement is actually possible for a normal middle class person without mortgaging, and renting for the duration of your working life.
Take a random girl who’s 33 now, and doesn’t want to deprive her family by anchoring them with deep debt for the rest of her working life. She wants to raise her family in rented accommodation, taking advantage of her flexibility to move when it’s right for her career, and giving her kids the benefit of the top class education she can afford for them. Part of her career will be spent in Paris or LA. But she’ll come back to Dublin.
At age 55, she’ll want to make sure she’s got a PPR lined up to take advantage of the unfair benefits afforded to owner-occupiers in Ireland (we’re still assuming these haven’t been repealed).
So she finds a home-owner aged about 72 who’s got serious need for cash, and buys big equity in his home. She has saved up 80k in today’s money for this purpose, and buys a 60% share in it. She does all the necessary legal work to be 100% sure it’s legit, then goes about her life.
When retirement age comes around, she’s 68 (that’ll definitely be the normal age by then) and the guy she bought equity off will be 85. Most likely he will be dead, but there’s a fair chance she’ll need to wait another 3-6 years before his house is 60% hers. If she’s saved prudently in the interim, the 40% extra should be easily within her means to take full ownership.
Then she’ll have her own place, be eligible for a state pension and have an asset that’ll pay for nursing home care. All with no mortgage or assuming that house prices fall in real terms.
I’d like you to point out any holes in that plan, so I can revise it.