According to The Press Association, mortgage lenders are about to change their standards in an effort to reduce the number of mortgages that are for more than the home is worth.

New standards put in place by CML will change the way properties are valuated. In the past few years builders have been drumming up some interesting deals on new homes so that they could meet their sales target in a market that barely had a pulse.

Cash back incentives, and other creative incentives may have resulted in a false value associated with the asking price. CML also believes that this has resulted in a significant increase in fraud.

The changes have to the loan to value ratio, which means it could result in a requirement up to 25% deposit. It will apply mostly to new developments. There will be 12 questions that will have to be answered relating to incentive programs that will determine what the actual deposit will be.

So what are these changes and how will they affect you? It depends what you’re in the market for. If you’re purchasing a property with no incentives attached to it, the changes shouldn’t affect you at all, however if you are caught up in a new development where incentives seem to be the way business is done, you could find yourself facing a heftier deposit than you did in the past.

These changes don’t come into affect until Sept of 2008 so you’ve got a little time to avoid the new mortgage standards.