If you have bad credit and are finally in a position to get a mortgage, one of the next decisions is whether a fixed or variable rate is the better option. While interest rates naturally play a part, the choice often comes down to something more important – how comfortable you are with future payment changes and how your wider financial position looks today.
For borrowers recovering from missed payments, defaults, CCJs, an IVA or other credit problems, stability can be just as valuable as securing the lowest possible rate. The right mortgage is not always the cheapest one. It is the one that remains affordable and manageable long after the application has been approved.
What is the difference between a fixed and variable rate mortgage?
A fixed rate mortgage keeps your interest rate the same for an agreed period, typically two, three or five years. During that time, your monthly payment remains unchanged, regardless of what happens to wider interest rates.
A variable rate mortgage can move up or down. This may be because it tracks the Bank of England base rate or because it follows a lender’s own variable rate. If rates rise, your mortgage payment could increase. If rates fall, your payment may reduce.
For borrowers with strong credit and plenty of lender choice, this can be a straightforward preference. For borrowers with adverse credit, the decision often requires a closer look at affordability, future plans and risk.
Why the choice matters more after credit problems
When you have experienced financial difficulties in the past, lenders tend to examine affordability more carefully.
They want to know not only whether you can afford the mortgage today, but whether it remains sustainable if circumstances change.
A fixed rate provides certainty. You know exactly what the mortgage payment will be each month during the fixed period. For borrowers rebuilding their finances, that predictability can be reassuring.
A variable rate can offer flexibility and may sometimes start with a lower rate, but it also introduces uncertainty. If your budget is already stretched, future payment increases may become difficult to manage.
When a fixed rate may be the better choice
A fixed rate often suits borrowers who value certainty and want to avoid surprises.
This can be particularly useful if:
- Your credit issues are relatively recent
- Affordability is tight
- You are buying your first home after adverse credit
- You want predictable monthly budgeting
- You are rebuilding confidence after previous financial difficulties
Knowing that your mortgage payment cannot suddenly increase can remove a significant amount of pressure.
Fixed rates can also help borrowers who expect rates to remain volatile over the next few years.
The trade-off is that fixed deals often include early repayment charges. If you expect your circumstances to improve quickly and you plan to remortgage again in the near future, those charges need to be considered.
When a variable rate may be worth considering
A variable rate is not automatically the riskier option in every situation.
It may be worth considering if:
- Your credit issues are older and well behind you
- You have comfortable disposable income
- You expect your mortgage options to improve in the near future
- You want greater flexibility
- You may remortgage again relatively soon
Some variable products have lower early repayment charges or more flexible features, which can appeal to borrowers who do not want to be tied into a longer fixed period.
The key question is whether your budget could comfortably absorb higher payments if rates increased.
Why headline rates do not tell the whole story
One of the most common mistakes borrowers make is comparing mortgages purely on the advertised interest rate.
In reality, the overall cost depends on:
- Arrangement fees
- Valuation fees
- Legal costs
- Early repayment charges
- Product incentives
- The length of time you expect to keep the mortgage
A slightly higher rate may still represent better value if it suits your plans and avoids unnecessary costs later.
The most suitable mortgage is rarely determined by rate alone.
How lenders assess bad credit borrowers
Lenders do not simply look at whether you have bad credit.
They assess:
- The type of adverse credit
- How recent it was
- Whether debts have been satisfied
- Deposit size
- Income stability
- Existing commitments
- Overall affordability
Two borrowers with similar credit histories may receive very different recommendations because their wider circumstances differ.
This is why there is no universal answer to whether fixed or variable is best.
Questions worth asking before you decide
Before choosing a product, consider:
- How stable is your monthly budget?
- How much room do you have if payments increase?
- How soon might you want to remortgage again?
- Do you expect your credit profile to improve significantly in the next few years?
- Would payment certainty help you manage your finances more confidently?
The answers often provide a clearer direction than rate comparisons alone.
Why advice matters with adverse credit mortgages
The right mortgage choice depends on more than the product itself. It depends on your credit history, income, deposit, future plans and the lenders available to you.
A recommendation should not be based on a generic rule that fixed rates are always safer or that variable rates are always cheaper. It should reflect your circumstances and what you need the mortgage to achieve over the next few years.
At Selective Mortgages, that conversation usually starts with understanding the full picture rather than focusing solely on the interest rate. The goal is not just securing mortgage approval, but finding a mortgage that remains comfortable and sustainable long after completion.