Home Exchange Loan: What It Is and When It Makes Sense to Use It

During a home exchange, situations often arise where a new home has been found but the old one hasn't sold yet. Helina Kikas, head of home loans at Luminor, explains how a home exchange loan can help make this transition period financially smoother.

Many property owners find themselves facing a challenging situation at some point: the dream new home has been found and is ready for purchase, but the current home hasn't sold yet. Such a time gap can create considerable stress and financial pressure – the solution is a home exchange loan.

What is a home exchange loan?

A home exchange loan is a temporary financial solution that allows a person to carry two loans simultaneously – both a new home loan and an existing property loan – until the old home has been sold. According to Helina Kikas, head of home loans at Luminor, this tool is designed precisely to prevent the moving process from becoming overly burdensome.

Who is it suitable for?

A home exchange loan is primarily suitable for those who have already found a suitable new home but whose current property hasn't yet found a buyer. It provides flexibility to complete the purchase before the sale, without having to rush and sell the old home below market value or give up on the new property.

It's important to remember that this is a temporary solution – a home exchange loan is a sensible choice when a person has reason to believe that their existing property will find a buyer within a reasonable timeframe. Before taking out such a loan, it's wise to carefully assess your financial ability to carry two loan obligations.