Bad Credit Equity Release Guide
Can You Get Equity Release with Bad Credit, CCJs or an IVA?
Yes, you may still be able to get equity release if you have bad credit, missed payments, defaults or County Court judgments. A completed IVA may also be accepted by some lenders. An active IVA is more complicated because permission from the IVA supervisor may be required and some or all of the money released could have to be paid to creditors.
My Later Life can compare suitable lenders and plans available through our service to help identify a lender whose criteria fit your circumstances and a competitive deal with appropriate features.
Can You Get Equity Release with Bad Credit?
Having a poor credit history does not automatically mean that equity release is unavailable.
Some lifetime mortgage lenders may consider applicants with low credit scores, late or missed payments, defaults, County Court judgments, debt-management plans, a completed Individual Voluntary Arrangement or previous bankruptcy that has been discharged.
A lifetime mortgage is different from a standard residential mortgage. Monthly repayments are not normally compulsory on a roll-up plan, so the lender may not assess affordability in the same way as a conventional repayment mortgage.
However, the lender will still want to understand your debts, legal commitments and whether any restrictions or charges are registered against your home.
A decline from one lender does not necessarily mean that all other equity release providers will reach the same decision. Lenders use different credit, legal and property criteria.
Bad Credit and Equity Release at a Glance
Acceptance will depend on the lender, the property, the amount requested, the legal position and your full circumstances.
Does Your Credit Score Matter for Equity Release?
The answer
A low credit score does not automatically prevent equity release.
A credit score is a number produced by a credit-reference agency. A lifetime mortgage lender may not use that number in the same way as a standard mortgage lender.
The lender is more likely to review the information behind the score, including mortgage arrears, late payments, defaults, CCJs, IVAs, bankruptcy, charging orders, outstanding secured debts and continuing legal action.
A high agency score does not guarantee approval, while a low score does not automatically cause a decline.
Can You Get Equity Release with a CCJ?
A County Court judgment does not always prevent a lifetime mortgage.
The lender may want to know the amount of the judgment, when it was registered, whether it has been paid, whether agreed payments are being maintained, whether enforcement action has been taken and whether a charging order has been secured against your home.
An old judgment that has been paid may be easier to place than a recent unpaid CCJ, although the final decision remains with the lender.
What Is a Charging Order?
A charging order secures a debt against your property.
The creditor does not automatically become the owner of your home, but the debt may have to be repaid when the property is sold or refinanced.
A lifetime mortgage lender will need to know about every charge registered against the title. Existing secured debts and charging orders may have to be cleared at completion.
The solicitor can obtain settlement figures and confirm how the charging order must be handled before the lifetime mortgage completes.
Can You Get Equity Release During an Active IVA?
More complicated
An active IVA does not automatically make equity release impossible, but you should not approach a lifetime mortgage lender without first speaking to your insolvency practitioner or IVA supervisor.
Your supervisor may need to establish whether your home forms part of the IVA, whether the arrangement requires you to investigate releasing equity, whether new secured borrowing is permitted, whether creditors must approve a variation, how much money must be paid into the IVA and whether restrictions against the property can be removed.
The correct answer depends on the wording of your own IVA, not a general rule found online.
Will Equity Release Automatically End an IVA?
No. Releasing equity does not automatically complete an IVA. (Individual Voluntary Arrangement)
The money might be used to pay an agreed lump sum into the IVA, settle the remaining balance, repay secured borrowing, meet legal or arrangement costs or fund another outcome agreed by the supervisor and creditors.
You should obtain written confirmation from the insolvency practitioner before assuming the IVA has ended.
What If the IVA Has Already Finished?
A completed IVA may still appear on your credit file for a period, and some lenders may want evidence before considering an application.
You may be asked to provide the IVA completion certificate, payment evidence, details of any remaining debts and confirmation that restrictions against the property title have been removed.
How Does an Application Work When You Have Bad Credit?
Review your addresses, debts, settled accounts and court judgments. Ask for inaccurate information to be corrected.
Disclose missed payments, defaults, CCJs, charging orders, IVAs, bankruptcy and debt-management plans.
Include the existing mortgage, secured debts, judgments, fees and any cash you want to receive afterwards.
The adviser identifies providers whose criteria may accommodate the credit and legal position.
The lender normally carries out credit, identity, property and underwriting checks.
The solicitor checks the title and obtains settlement figures for mortgages, secured loans and charging orders.
At completion, the solicitor normally clears debts that must be repaid before sending any remaining money to you.
Can Equity Release Be Used to Pay Off Debts?
Yes, released money may be used to repay an existing mortgage, mortgage arrears, secured loans, credit cards, personal loans, overdrafts, outstanding CCJs and debts included in an IVA where agreed.
Clearing a debt does not make its cost disappear.
A credit-card balance or personal loan might otherwise be repaid over several years. Once moved onto a lifetime mortgage, the debt may remain secured against your home for the rest of your life.
Unless repayments are made, interest can be charged on both the original borrowing and the interest already added. The eventual cost may therefore be substantially higher.
Worked Example: What Could Be Left After Debts Are Repaid?
A homeowner aged 70 owns a property valued at approximately £375,000 and is approved for an illustrative lifetime mortgage of £105,000.
A personalised illustration should explain how the full £105,000 lifetime mortgage balance could grow over time.
This is a simplified example and not a quotation or personal recommendation.
Documents You May Need
Copies from the main credit-reference agencies.
Recent statements for mortgages and secured loans.
Reference numbers, payment records and satisfaction evidence.
The proposal, current terms, supervisor correspondence and completion certificate.
Discharge evidence and confirmation regarding the property title.
Photo ID, proof of address and documents requested by the lender or solicitor.
Alternatives to Equity Release
Equity release may be suitable for some homeowners with debts, but it should not be treated as the automatic solution.
A debt adviser may help negotiate affordable arrangements with creditors.
Existing savings may reduce the amount you need to borrow.
A standard mortgage may be available, subject to affordability.
Monthly interest payments are required and affordability must be demonstrated.
Moving to a less expensive property could release money without lifetime mortgage interest.
Completing the arrangement without further secured borrowing may be the better option.
How My Later Life Can Help
Bad credit does not affect every equity release lender in the same way.
One provider may accept an older satisfied CCJ but decline an unpaid judgment. Another may consider a completed IVA after reviewing the completion certificate. The property, amount required and debts that must be repaid can also influence the available options.
At My Later Life, we take the time to understand your credit history, the amount and status of each debt, any CCJs or charging orders, whether an IVA is active or completed, your existing mortgage, your property, how much money you need and your future plans.
We can then search across suitable equity release lenders and plans available through our service.
Our aim is not simply to locate the first lender willing to accept the application. We compare the interest rate, fees, repayment features, early-repayment charges, portability and other plan conditions to help identify a competitive deal that fits your circumstances.
Where equity release is not suitable, we will discuss relevant alternatives rather than recommending that you proceed regardless.
Equity Release with Bad Credit FAQs
Can I get equity release with bad credit?
Potentially. Poor credit does not automatically prevent a lifetime mortgage, although the lender will review your debts, legal charges and wider circumstances.
Does an old CCJ need to be declared?
Yes. You should disclose CCJs and provide evidence showing whether they have been paid or remain outstanding.
Can equity release remove a charging order?
The released money may be used to repay the debt secured by a charging order. Your solicitor would then arrange for the charge to be dealt with as part of completion.
Can my IVA supervisor refuse equity release?
Potentially. The supervisor must follow the terms of the IVA and may require creditor approval.
Can I obtain equity release with mortgage arrears?
It may be possible if the lifetime mortgage raises enough to repay the existing mortgage and arrears in full.
Will repaying debts improve my credit report?
Settling debts may eventually improve the information shown on your credit file, but taking out a lifetime mortgage does not guarantee a higher credit score.
Can I make repayments after consolidating debt?
Many lifetime mortgages allow voluntary repayments within plan limits. The exact allowance varies by lender.
Would You Like to Understand Your Options?
Speak to a qualified My Later Life adviser about bad credit, CCJs, IVAs, existing debts and suitable later-life mortgage options. We will explain the position clearly and give you time to decide.
Call 0207 100 4255 Explore Your OptionsEquity Release with Bad Credit, CCJs or an IVA: The Final Answer
Bad credit, CCJs or a previous IVA do not necessarily prevent you from obtaining equity release.
An active IVA requires particular care because the supervisor’s permission may be needed and creditors may have a claim over some or all of the property equity.
Existing secured borrowing will normally need to be repaid at completion. Clearing unsecured debts may also form part of the recommendation, but moving short-term debts onto a lifetime mortgage can increase the total long-term cost.
At My Later Life, we can review your credit history, property and objectives before comparing suitable equity release lenders and plans available through our service.
Written by Simon Oliver , Equity release specalist at My Later Life.
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Important information: Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
A lifetime mortgage is a loan secured against your home. Interest may be added to the amount borrowed, meaning the balance can increase through compound interest.
Using a lifetime mortgage to repay unsecured debts can convert short-term borrowing into long-term debt secured against your home.
An IVA is a formal insolvency arrangement. You should speak to your insolvency practitioner and obtain any required consent before applying for further secured borrowing.
N.B. “This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.”
