diff --git a/cmd/loop/loopout.go b/cmd/loop/loopout.go
index 73d50a3..a2ceb98 100644
--- a/cmd/loop/loopout.go
+++ b/cmd/loop/loopout.go
@@ -238,6 +238,7 @@ func loopOut(ctx *cli.Context) error {
 	resp, err := client.LoopOut(context.Background(), &looprpc.LoopOutRequest{
 		Amt:                     int64(amt),
 		Dest:                    destAddr,
+		IsExternalAddr:          destAddr != "",
 		Account:                 account,
 		AccountAddrType:         accountAddrType,
 		MaxMinerFee:             int64(limits.maxMinerFee),
diff --git a/interface.go b/interface.go
index 1a48492..17affe8 100644
--- a/interface.go
+++ b/interface.go
@@ -20,6 +20,11 @@ type OutRequest struct {
 	// Destination address for the swap.
 	DestAddr btcutil.Address
 
+	// IsExternalAddr indicates whether the provided destination address
+	// does not belong to the underlying wallet. This helps indicate
+	// whether the sweep of this swap can be batched or not.
+	IsExternalAddr bool
+
 	// MaxSwapRoutingFee is the maximum off-chain fee in msat that may be
 	// paid for payment to the server. This limit is applied during path
 	// finding. Typically this value is taken from the response of the
diff --git a/liquidity/autoloop_test.go b/liquidity/autoloop_test.go
index 3799748..561a0e1 100644
--- a/liquidity/autoloop_test.go
+++ b/liquidity/autoloop_test.go
@@ -422,6 +422,7 @@ func TestAutoloopAddress(t *testing.T) {
 			Amount: amt,
 			// Define the expected destination address.
 			DestAddr:          addr,
+			IsExternalAddr:    true,
 			MaxSwapRoutingFee: maxRouteFee,
 			MaxPrepayRoutingFee: ppmToSat(
 				quote1.PrepayAmount, prepayFeePPM,
@@ -439,6 +440,7 @@ func TestAutoloopAddress(t *testing.T) {
 			Amount: amt,
 			// Define the expected destination address.
 			DestAddr:          addr,
+			IsExternalAddr:    true,
 			MaxSwapRoutingFee: maxRouteFee,
 			MaxPrepayRoutingFee: ppmToSat(
 				quote2.PrepayAmount, routeFeePPM,
diff --git a/liquidity/liquidity.go b/liquidity/liquidity.go
index d41b25e..acf01ef 100644
--- a/liquidity/liquidity.go
+++ b/liquidity/liquidity.go
@@ -450,6 +450,13 @@ func (m *Manager) autoloop(ctx context.Context) error {
 		// Create a copy of our range var so that we can reference it.
 		swap := swap
 
+		// Check if the parameter for custom address is defined for loop
+		// outs.
+		if m.params.DestAddr != nil {
+			swap.DestAddr = m.params.DestAddr
+			swap.IsExternalAddr = true
+		}
+
 		go m.dispatchStickyLoopOut(
 			ctx, swap, defaultAmountBackoffRetry,
 			defaultAmountBackoff,
diff --git a/liquidity/loopout_builder.go b/liquidity/loopout_builder.go
index 8048aea..b2c6040 100644
--- a/liquidity/loopout_builder.go
+++ b/liquidity/loopout_builder.go
@@ -138,6 +138,7 @@ func (b *loopOutBuilder) buildSwap(ctx context.Context, pubkey route.Vertex,
 	// already validated them.
 	request := loop.OutRequest{
 		Amount:              amount,
+		IsExternalAddr:      false,
 		OutgoingChanSet:     chanSet,
 		MaxPrepayRoutingFee: prepayMaxFee,
 		MaxSwapRoutingFee:   routeMaxFee,
@@ -160,9 +161,11 @@ func (b *loopOutBuilder) buildSwap(ctx context.Context, pubkey route.Vertex,
 		if len(params.Account) > 0 {
 			account = params.Account
 			addrType = params.AccountAddrType
+			request.IsExternalAddr = true
 		}
 		if params.DestAddr != nil {
 			request.DestAddr = params.DestAddr
+			request.IsExternalAddr = true
 		} else {
 			addr, err := b.cfg.Lnd.WalletKit.NextAddr(
 				ctx, account, addrType, false,
diff --git a/loopd/swapclient_server.go b/loopd/swapclient_server.go
index 845885c..05f9156 100644
--- a/loopd/swapclient_server.go
+++ b/loopd/swapclient_server.go
@@ -100,6 +100,7 @@ func (s *swapClientServer) LoopOut(ctx context.Context,
 	log.Infof("Loop out request received")
 
 	var sweepAddr btcutil.Address
+	var isExternalAddr bool
 	var err error
 	//nolint:lll
 	switch {
@@ -117,6 +118,8 @@ func (s *swapClientServer) LoopOut(ctx context.Context,
 			return nil, fmt.Errorf("decode address: %v", err)
 		}
 
+		isExternalAddr = true
+
 	case in.Account != "" && in.AccountAddrType == clientrpc.AddressType_ADDRESS_TYPE_UNKNOWN:
 		return nil, liquidity.ErrAccountAndAddrType
 
@@ -141,6 +144,8 @@ func (s *swapClientServer) LoopOut(ctx context.Context,
 				"%v", err)
 		}
 
+		isExternalAddr = true
+
 	default:
 		// Generate sweep address if none specified.
 		sweepAddr, err = s.lnd.WalletKit.NextAddr(
@@ -166,6 +171,7 @@ func (s *swapClientServer) LoopOut(ctx context.Context,
 	req := &loop.OutRequest{
 		Amount:                  btcutil.Amount(in.Amt),
 		DestAddr:                sweepAddr,
+		IsExternalAddr:          isExternalAddr,
 		MaxMinerFee:             btcutil.Amount(in.MaxMinerFee),
 		MaxPrepayAmount:         btcutil.Amount(in.MaxPrepayAmt),
 		MaxPrepayRoutingFee:     btcutil.Amount(in.MaxPrepayRoutingFee),
diff --git a/loopout.go b/loopout.go
index f1b1be2..f96265f 100644
--- a/loopout.go
+++ b/loopout.go
@@ -172,6 +172,7 @@ func newLoopOutSwap(globalCtx context.Context, cfg *swapConfig,
 	contract := loopdb.LoopOutContract{
 		SwapInvoice:             swapResp.swapInvoice,
 		DestAddr:                request.DestAddr,
+		IsExternalAddr:          request.IsExternalAddr,
 		MaxSwapRoutingFee:       request.MaxSwapRoutingFee,
 		SweepConfTarget:         request.SweepConfTarget,
 		HtlcConfirmations:       confs,