When applying for a mortgage, the lender or broker typically asks several questions regarding your income and expenditure. One question often asked is how much money you typically spend per month on food / drink / groceries. Another question often asked is how much you spend on leisure / clothes / holidays / other personal items.

However, these kind of expenditures are not verifiable through official documentation, such as a payslip. Furthermore, it is very difficult to predict the amount you spend, as this often changes with lifestyle / time of year / working hours. Finally, mortgage applicants could simply lie and give a lower estimate than the truth, to make themselves appear less of a risk to the lender.

So why are these questions asked at all? Instead, why do lenders not simply ask for bank statements and make the estimate themselves?

  • What country is this in? I don't recall being asked this any of the times I've taken a mortgage or refinanced.
    – Joe
    Jan 26 '16 at 22:42
  • In the UK. It seems to be normal here. Jan 27 '16 at 1:46

In some cases, especially but not only for subprime loans, they are actually testing whether you will lie to them.

(Discovered this when working on a loan origination applicatíon for car dealers -- they explicitly did not want us to autocomplete some values because that might remind applicants that answers would be checked.)

  • 1
    It would be interesting to know just how they determine what's a lie, and what's just someone living a non-mainstream lifestyle. As for instance I like to cook, have a large garden, and really don't like eating out, so I spend less than half as much on food as the average person. (Per USDA figures.)
    – jamesqf
    Jan 26 '16 at 19:04
  • 1
    The specifics of what they validate , and how, and how they respond to what they find, are trade secrets. In general, it's hard to lie consistently; and most folks who can do so don't need to.
    – keshlam
    Jan 26 '16 at 22:36

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