The Estonian Ministry of Finance is set to amend the rules for refinancing home loans, allowing banks to use automated valuation models instead of requiring a physical appraisal from a real estate agency. This change aims to simplify and reduce the costs associated with the refinancing process, alleviating some barriers for borrowers. As noted by Finance Minister Jürgen Ligi, the proposed adjustments strive to facilitate responsible lending without imposing unnecessary artistic barriers in the service market.

Currently, individuals looking to take out or refinance a home loan must often procure a new property appraisal—which can cost up to 500 euros, representing a significant expense for borrowers. This change is anticipated to streamline the refinancing process, making it more accessible. According to Bank of Estonia data, around 300-400 home loans are refinanced between banks each year, which is a relatively small fraction of the total housing loans but indicates a potential for growth in this area with reduced barriers.

The new requirements, which are expected to be implemented by early 2027, will empower banks to decide the necessity of a physical assessment for properties used as collateral in home loans. This approach aligns with the broader goal of enhancing the flexibility and efficiency of the housing loan market in Estonia and may encourage more refinancing actions within the financial sector, ultimately benefiting consumers looking for better mortgage terms in a changing economic landscape.