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Bad Credit Equity Release

Worried that a poor credit score could hold you back from equity release? It may not have as much of an impact as you think. Find out more in our comprehensive guide.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 17, 2022

Lots of equity but a bad credit record? It’s a common problem. Lots of people reach retirement and want to consider releasing some of the equity in their home to boost their pension income but are worried their credit history could hold them back.

Luckily equity release can still be a possibility, though you may have a few more hoops to jump through. This guide will tell you everything you need to know about getting equity release with bad credit, and how to make sure you stand the best chance of success.

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Can you get equity release with bad credit?

Yes, you can. In fact, surprisingly, you may even have a better chance of qualifying for an equity release scheme, if you have a poor credit score, than you would for a traditional mortgage.

With equity release there’s no requirement to make monthly repayments during your lifetime – unless you choose to and your plan allows it – which means you won’t face an affordability assessment and your credit score won’t be as closely scrutinised as it would be for other forms of finance.

Instead, the loan is wholly secured on your home and will be repaid on your death or sale of the property, with the future saleability of said property therefore the most important factor.

This means you should still be able to get equity release with bad credit, though it may depend on the severity of your financial situation. For example, if you’ve got a large amount of existing debt, CCJs or have been declared bankrupt, you may find it more difficult to be approved.

Speaking to a specialist broker is always recommended, as they’ll be able to work with you and decide whether or not your past credit history will have an impact on your application.

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Which credit issues will providers accept?

If you’ve simply got a poor credit score because of low-level misdemeanours – perhaps you missed a payment here and there – you’ll normally still have a good chance of being accepted for equity release.

Just bear in mind that this can depend on the terms and conditions of the individual lender, with some expecting a completely clean credit history. On the other hand, others will accept more adverse forms of credit, so you’re unlikely to be locked out completely.

Can you get equity release if you have outstanding debts?

If they’re not secured on your property, then yes, you can. This includes things like unsecured personal loans, overdrafts, car finance agreements and credit cards. Provided you’re managing the debts effectively they should have no bearing on your equity release application, though if you’re in arrears, some lenders may expect you to use a portion of the money released to clear the debt.

However, it can be more difficult to be approved if any of your current debts are attached to your home. Your new lifetime mortgage agreement must be the only debt secured on your property, so if you’ve still got a current mortgage balance or secured loan, you may not be eligible for equity release.

That said, some lenders will allow you to use a lump sum from your equity release plan to clear any existing first or second charges, though again, this will depend on the lender.

Can you get equity release if you have a CCJ?

It’s unlikely. If you have a County Court Judgment (CCJ) you’ll be classed as higher risk and may find it more difficult to be approved, because there’s the chance the company could place a charging order on your property if you don’t stick to the agreement, or may force you to sell your home in order to repay it.

Because another party has an interest in your property, you’ll normally be required to be clear of the CCJ and settle the debt before you apply for a lifetime mortgage. In some cases, you may be able to use the equity you release to clear it, though this will often require the involvement of a solicitor and may not be possible with all lenders.

What if you’ve been declared bankrupt?

If you’ve been declared bankrupt then you won’t qualify for equity release. You’ll need to be discharged from bankruptcy before a lender will consider it.

The bankruptcy will stay on your file even after you’ve been discharged, but provided you’ve been fully released from any debts this shouldn’t impact your eligibility. However, you’ll still be required to tell your broker and lender of any previous bankruptcies, regardless of when they took place.

How to get equity release with a bad credit rating

Ready to apply for equity release? Here’s how to stand the best possible chance of securing the deal you need.

Step 1: Check your credit report.

This is vital for all borrowers, but even more so if you’re concerned about your credit history. Make sure to check for any errors that could be weighing down your score, and contact the relevant credit reference agency to get any mistakes removed. Similarly, check that any previous financial links (such as ex-partners who have since moved out) have been severed so you’re not tied to someone else’s poor credit rating.

It’s important to familiarise yourself with information the lender will be looking for and to take action if you spot any areas of improvement. If you’ve got any CCJs, for example, now could be the time to settle them. Head to our credit report hub to get started.

Step 2: Speak to an equity release broker.

This is another crucial step for borrowers who have a less-than-stellar credit history, as a specialist broker will know exactly what you need to do to give your application the best chance of getting approved.

They’ll be able to advise on your credit rating and what it could mean for your application, and can work with you to identify any areas that you need to focus on ahead of time. They’ll be on-hand to manage your application at every step of the way and deal with any queries you may have. Most importantly, they’ll know the providers to approach based on your unique circumstances.

If you get in touch, we’ll arrange for an expert in this area to contact you straight away for a free initial discussion.

Step 3: Find the right provider

Not all lenders will be willing to take on someone with a poor credit history, particularly if the reasons for it are quite serious. This is why it’s vital to do your research so you know who’s most likely to accept your application and avoid the possibility of a rejection, and a broker will be able to use their contacts and knowledge of the industry to find you the provider to suit.

Bear in mind that equity release is a niche product and not all lenders operate in this space, particularly mainstream or high street lenders. It’s likely you’ll need to look for smaller, specialist providers to accommodate.

Can you remortgage to release equity with bad credit?

The short answer is yes, though you may have an even tougher time finding a suitable deal – or at least, getting a competitive rate – if you’ve got a poor credit score.

This is because remortgages are a more traditional form of finance and lenders need to be confident that you’re not going to default, but a poor credit score may indicate that this is more likely. As such you’ll be deemed a higher credit risk and could face less favourable terms, and may be declined altogether, particularly if you’re approaching a high street lender.

Your age could come into it as well. Equity release is specifically designed for homeowners aged over 55 for whom traditional mortgage options are becoming more limited, largely thanks to maximum age limits and impending retirement. Remortgaging could therefore be more difficult to arrange for this reason, too.

Other alternatives to consider

Remortgaging to release equity may not be impossible, though you may find a retirement interest-only mortgage a more suitable alternative.

Retirement interest-only mortgages are specifically designed for older homeowners who want to extend their mortgage but who, because of their age, are locked out of traditional deals. They’re able to remortgage to an interest-only deal and may be able to release equity in the process, and will be required to repay the interest each month.

The exit strategy is typically the same as with equity release – you’ll be expected to repay the loan on the eventual sale of the property, and won’t need to make any capital repayments during the term of the mortgage. This can offer a viable alternative to equity release, though your credit score can still come into it, and your options may be more limited as a result. Speak to a broker if you’re considering going down this route.

Does equity release affect your credit score?

No. You don’t have to make any repayments so it won’t have any bearing on your credit report, though you’ll still be credit checked, which will always result in a temporary dip to your score. However, this won’t last long and shouldn’t impact any future credit applications you make.

Can I get equity release with no credit check?

No. Equity release lenders will always need to perform a credit check, it’s just that your score won’t have such a significant bearing on your application.

Get matched with a bad credit equity release advisor

The key to being accepted for equity release when you have bad credit is to find a specialist broker to help with your application. That’s where we come in.

Our unique broker matching service will put you in touch with the broker who’s perfect for your needs. Just tell us a few details and we’ll scour our network of advisors to find one to suit – with plenty of brokers who specialise in bad credit equity release, you can be confident that you’ll soon have the necessary expertise on your side.

Get started today – make an enquiry or call us on 0808 189 2301 for a free, no obligation chat.


Does equity release affect pension credit?

Yes. Pension credit is means-tested and so your eligibility will depend on your savings and income. If you release equity, the amount will count towards your savings and will be included in any income calculation, potentially impacting the amount of pension credit you’ll be entitled to.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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