Origination Points in Australia: What Borrowers Need to Know (2025 Guide)

Whether you’re eyeing a new mortgage, personal loan, or business finance in Australia, origination points could quietly add hundreds or thousands to your upfront costs. But what exactly are origination points, and how do they impact your borrowing in 2025?

What Are Origination Points?

Origination points (also known as loan origination fees) are upfront charges lenders impose for processing and approving your loan. Typically calculated as a percentage of the loan amount, these fees help lenders cover administrative costs, credit checks, and time spent underwriting the loan. In Australia, origination points are most common in mortgages, commercial loans, and some personal loans.

• How much? Origination fees usually range from 0.5% to 2% of the loan value, but can be higher for riskier borrowers or more complex applications.
• Who pays? The borrower pays origination points at settlement or when the loan is disbursed.
• Example: On a $500,000 mortgage with a 1% origination point, you’d pay $5,000 upfront in addition to other costs.

2025 Lending Trends and Policy Updates

The Australian lending landscape has shifted in 2025, with tighter regulations and increased transparency requirements for all fees, including origination points. The Australian Securities & Investments Commission (ASIC) has introduced new disclosure standards compelling lenders to itemise origination points separately from other fees on loan documentation. This empowers borrowers to compare offers more easily and avoid hidden surprises.

Key 2025 developments:

• Mandatory fee breakdowns: All lenders must display origination points as a distinct line item in loan contracts and digital quotes.
• Comparison rate reform: Changes to the way comparison rates are calculated mean origination points are now always factored into the advertised comparison rate, giving borrowers a more accurate picture of total costs.
• Fee negotiation: With increased competition, some non-bank lenders are more willing to negotiate or waive origination points for strong borrowers, especially those with large deposits or low-risk profiles.

How Origination Points Impact Your Loan—and Your Strategy

While origination points can feel like an unavoidable cost, understanding their impact is critical for smart borrowing:

• Cash flow: Origination points are paid upfront, so they increase the initial cash required at settlement. For home buyers, this can affect your deposit and moving budget.
• Loan comparisons: Two loans with identical interest rates can have very different total costs depending on origination points. Always compare the comparison rate, which includes these fees.
• Refinancing: If you plan to refinance within a few years, high origination points could erode the savings from a lower interest rate.

Smart borrowers in 2025 are:

• Requesting a full fee schedule from every lender and broker.
• Using online calculators that factor in origination points to determine true loan costs.
• Negotiating with lenders—especially if they have a strong credit profile or are borrowing large amounts.
• Factoring origination points into their budget, not just the interest rate or monthly payment.

Real-World Example: Comparing Two Home Loans

Suppose you’re weighing two home loan offers in 2025:

• Lender A: 6.30% interest, 0.5% origination point on $600,000 = $3,000 fee
• Lender B: 6.10% interest, 1.5% origination point on $600,000 = $9,000 fee

At first glance, Lender B’s lower interest rate seems more attractive. But when you factor in the higher origination point, the total cost over the first five years could actually be higher than Lender A’s offer, depending on how long you keep the loan. This is why the new 2025 comparison rate reforms are so important—they help you see the real cost at a glance.

The Bottom Line: Don’t Ignore Origination Points

Origination points might seem like a small line item in the fine print, but they can make a significant difference to the real cost of borrowing in Australia. With stricter 2025 disclosure laws and more competition among lenders, it’s easier than ever to spot and negotiate these fees. Always include origination points in your loan comparison, ask lenders about potential discounts, and use the full cost—not just the interest rate—to drive your decision.