How Do Buy to Let Mortgages in Leicester Work?

Deposits for buy to let mortgages are typically higher than residential mortgages.

As a landlord, you will usually need at least 20% to 25% of the property’s value as a deposit.

A larger deposit can sometimes open up access to more competitive interest rates, which can improve your overall return on investment.

For landlords in Leicester, this can be especially relevant when purchasing in areas with strong rental demand, where yields can vary depending on location and property type.

Interest Only vs Repayment Mortgages

Most buy to let mortgages in Leicester are arranged on an interest-only basis.

This means your monthly payments cover the interest on the loan, rather than reducing the loan balance itself.

Many landlords choose this option as it keeps monthly payments lower, which can help with cash flow.

At the end of the mortgage term, the original loan amount still needs to be repaid, often through the sale of the property or another repayment strategy.

Repayment mortgages are also available, where both the capital and interest are paid off over time. This results in higher monthly payments, though the mortgage balance reduces gradually.

How Lenders Assess Buy to Let Applications

When applying for buy to let mortgage advice in Leicester, lenders look at several key factors.

Rental income is a major part of the assessment, though your personal financial situation still plays a role.

Lenders will review your credit history, existing financial commitments, and sometimes your income, particularly if you are a first-time landlord.

Some lenders also have minimum income requirements, even though the mortgage is primarily supported by rental income.

Your experience as a landlord can also influence the options available. First-time landlords may have slightly fewer products to choose from, though there are still suitable options available depending on your circumstances.

Rental Yield & Investment Potential in Leicester

Rental yield is an important consideration when looking at buy to let mortgages in Leicester.

This is the annual rental income expressed as a percentage of the property’s value.

Different areas of Leicester can offer varying yields. Locations close to universities, such as Clarendon Park or areas near De Montfort University, often attract student tenants.

Other areas may appeal more to families or working professionals.

As a landlord, choosing the right property in the right location can make a significant difference to your long-term returns.

Types of Buy to Let Mortgages Available

There are several types of buy to let mortgages available, depending on your situation.

Standard buy to let mortgages are suitable for individuals purchasing in their own name.

Some landlords choose to purchase through a limited company structure.

This can have different tax considerations and may affect the mortgage products available.

There are also options for houses in multiple occupation, commonly known as HMOs, which are properties rented out to multiple tenants who are not from the same household.

These can offer higher rental income, though they often come with stricter lending criteria and licensing requirements.

Remortgaging a Buy to Let Property

Remortgaging is a common step for landlords in Leicester.

This could be done to secure a better interest rate, reduce monthly payments, or release equity from the property.

Releasing equity can allow you to reinvest in additional properties, helping to grow your portfolio over time. Lenders will reassess the property’s value and rental income when considering a remortgage.

As a mortgage broker in Leicester, we often help landlords review their existing deals to ensure they remain suitable as their circumstances change.

Date Last Edited: April 1, 2026