Mortgages are essentially another form of loan, but they differ substantially from normal bank loans in that they are secured. A secured loan is a loan which is backed up or guaranteed by a physical asset (the house in this case). What this means for the bank is that in the event that you were unable to make your repayments they would have something to sell to reclaim at least part of the money. That is why a bank will lend you more on a secured loan, but also why some institutions suggest a mortgage for people with bad credit.
If you have a fair amount of unsecured debt (over £15k or so) it is worth considering a secured loan option. This could mean taking out a new mortgage or refinancing an existing mortgage to absorb the unsecured loan and secure it. A prime example is a customer who came into my bank with two capital one credit cards, each with about £12,000 on them and an APR of 15.9% and 18.9% respectively. As she was paying minimum balances and had missed a payment on one, a friend had advised her that because of her bad credit, mortgages were the best way forward.
Well, I took her through our mortgage calculator to see how much she could borrow after we figured out that she wasn't tied into her current mortgage deal. As she only had £20,000 outstanding on her mortgage we were able to lend her enough to consolidate both her credit cards and mortgage into one secured loan on her house, not only saving her money but also structuring her repayments, meaning she had a finite time-frame to become debt free.
When lending on a secured loan such as a mortgage, most banks will look at affordability of repayments, debt to equity ratio and house price stability as well as credit files, which is why they can be a godsend for people with bad credit or CCJs. As an income stream can never be guaranteed I highly advise looking at some form of mortgage insurance.
N.b. Individual circumstances vary and these articles only provided for illustrative purposes. I recommend you see a bank assistant or a financial advisor if you need help with your finances.
