Question:
I read somewhere that banks may not add the annual house owner’s insurance premium onto the bond repayment (which incurs interest), but must charge this premium separately.

Is this correct? Can we claim the interest charged over the years of repayment?

Answer:
Yes, it true that the bank is not allowed to charge interest on an insurance premium.

The bank can add the premium onto your statement, but they do a separate calculation. In other words, they will calculate your bond repayment and then add your premium to the statement.

They do not charge you interest on the insurance portion.