for residential purposes. Distinction between commercial and buy-to-let lending In the UK there is a distinction between commercial mortgages, which are for the purchase of non-residential real estate, and buy-to-let mortgages, which are for the purchase of residential real estate to let out to paying tenants. Buy-to-let loans may be offered by both commercial and residential mortgage lenders. Buy-to-let mortgages share similarities with both commercial and residential mortgages. Because of high consumer demand and the lower capital offset requirements, mortgage lenders are able to offer buy-to-let finance at typically lower interest rates than commercial mortgages. There is also a degree of regulatory crossover between the buy-to-let and residential markets, and many buy-to-let lenders employ underwriting checks similar to those prescribed by the FCA for residential mortgage applications. Like commercial mortgages, however, buy-to-let mortgages are underwritten according to debt-service coverage rather than income multiples. High street banks might calculate DSCR at 160–170% for commercial mortgages and 125–130% for buy-to-let mortgages, while a minority of specialist lenders might calculate it at 125–130% for commercial mortgages and 110% for buy-to-let mortgages. References Mortgage Banking Corporate finance