Upfront commission is paid once, shortly after settlement, and for most Australian residential lenders sits between 0.55% and 0.70% of the loan amount. Since the industry reforms that followed the 2019 royal commission it is generally calculated on the amount drawn down net of any offset balance, rather than the facility limit, so a $800,000 loan with $200,000 parked in offset pays upfront on $600,000.
The upfront is not final for up to two years. If the client refinances or pays the loan out inside the lender's clawback window, part or all of it is recovered from the broker. That is why a broker's cash position is only truly settled once the youngest loans on the book pass their clawback dates.
Upfront and trail pull in opposite directions in a broker's business. Upfront rewards writing new loans; trail rewards keeping them. A book with a strong trail line can be worth more to sell than the same broker's annual upfront, which is why retention tools focus on the trail side.