Establishment Fees

Establishment fees, also known as application fees or setup fees, are one-time charges imposed by lenders or service providers to cover the costs associated with setting up a loan or service. These fees are typically payable at the beginning of a contract or agreement and can vary depending on the type and size of the loan or service. Establishment fees are common in various financial products, including home loans, personal loans, business loans, and bridging loans.

Importance of understanding establishment fees

Cost of borrowing

Understanding establishment fees is crucial for borrowers as they contribute to the overall cost of borrowing. By knowing these fees upfront, borrowers can better compare different loan products and assess their affordability.

Financial planning

Establishment fees can impact a borrower’s initial cash flow and financial planning. Being aware of these fees helps borrowers allocate sufficient funds to cover the upfront costs associated with obtaining a loan or service.


Knowing the establishment fees ensures transparency in the borrowing process. Borrowers can avoid unexpected costs and make informed decisions based on the full cost of the loan or service.


In some cases, establishment fees may be negotiable. Understanding these fees can empower borrowers to negotiate with lenders or service providers to reduce or waive them, potentially saving money.

Key components of establishment fees

Loan type

The type of loan or service significantly influences the establishment fees. For example, home loans and business loans may have higher establishment fees compared to personal loans due to the complexity and administrative work involved.

Loan amount

The size of the loan can affect the establishment fees. Larger loans often have higher establishment fees as they require more extensive processing and documentation.

Lender policies

Different lenders have varying policies regarding establishment fees. Some may charge a flat fee, while others might calculate the fee as a percentage of the loan amount. It is essential to review the lender’s fee structure before committing to a loan.

Services included

Establishment fees may cover various services, such as credit checks, property appraisals, legal fees, and administrative costs. Understanding what is included in the establishment fee helps borrowers determine its value and relevance.

Pros and cons of establishment fees


  • Covers administrative costs: Establishment fees help lenders cover the costs associated with processing and setting up a loan or service.
  • Encourages thorough assessment: By charging an establishment fee, lenders can ensure they conduct thorough assessments and verifications, which can lead to more responsible lending practices.
  • Upfront cost disclosure: Establishment fees provide borrowers with an upfront disclosure of the initial costs, promoting transparency in the borrowing process.


  • Increased borrowing cost: Establishment fees add to the overall cost of borrowing, which can be a financial burden for some borrowers.
  • Impact on cash flow: Paying establishment fees upfront can impact a borrower’s initial cash flow and financial planning.
  • Potential for hidden costs: If not clearly disclosed, establishment fees can lead to misunderstandings and unexpected expenses.

Applications of establishment fees

Home loans

In home loans, establishment fees cover the costs of property appraisals, credit checks, legal fees, and administrative work required to process the mortgage application. These fees can be significant and should be factored into the overall cost of purchasing a property.

Personal loans

Personal loans may have lower establishment fees compared to home loans, but they still cover the costs of credit checks and administrative processing. Borrowers should compare establishment fees among different lenders to find the most cost-effective option.

Business loans

For business loans, establishment fees can cover a range of services, including business credit checks, financial analysis, and legal documentation. These fees can vary widely depending on the complexity and size of the loan.

Bridging loans

Bridging loans, used to cover short-term financing needs between property transactions, often come with establishment fees. These fees cover the costs of setting up the loan quickly and efficiently to meet the borrower’s urgent needs.

Establishment fees in action

Consider a couple in Wollongong who apply for a home loan to purchase their first house. The lender charges an establishment fee of $1,200 to cover the costs of processing the loan application, conducting a property appraisal, and performing credit checks. The couple needs to factor this fee into their overall budget for purchasing the property.

  1. Loan type: Home loan
  2. Establishment fee: $1,200
  3. Services included: Loan processing, property appraisal, credit checks
  4. Total cost: The couple needs to include the establishment fee in their overall home-buying budget.

Loans and trusts

Establishment fees are relevant in various types of loans, including bridging loans, building loans, and business loans. For example, a business owner applying for a business loan to expand their operations might face an establishment fee that covers the costs of business credit checks and financial analysis. Similarly, an establishment fee for a building loan might include costs related to property appraisals and legal documentation. Income trusts may also incur establishment fees when setting up the trust structure and managing initial administrative tasks.

External link

For more information on establishment fees and their implications, visit the Australian Securities and Investments Commission (ASIC) website.


Establishment fees are an essential component of various financial products and services. Understanding these fees helps borrowers assess the true cost of borrowing, plan their finances effectively, and make informed decisions. By considering the type of loan, loan amount, lender policies, and services included, borrowers can better navigate the borrowing process and avoid unexpected costs. Transparency and knowledge about establishment fees can lead to more responsible financial planning and improved borrowing experiences.

DISCLAIMER: The information provided on this page is for general informational and educational purposes only and is never intended as financial advice. While we strive to ensure that the content is accurate and up-to-date, it may not reflect the most current legal or financial developments. Always consult with a qualified financial advisor or professional before making any financial decisions. Use the information at your own risk.

billboard business

Fuel your start-up dreams

Accelerate your success with flexible Business Loans

Ready to turn your entrepreneurial vision into reality? Funding's Business Loans are tailored to meet the unique needs of founders and entrepreneurs, providing the capital and support you need to launch and grow your business. Get ahead, sooner, and take your startup to new heights with Funding’s Business Loans.

Confidence grows with knowledge

Get ahead with our useful resources and expert insight.

For aspiring investors, navigating the property market and securing the right financing can be challenging. Bridging loans, a type of short-term pr...

Read the blog

Move Forward Faster

Reach your goals sooner with our borrowing and investing solutions.
arrow pattern