Once house (landed, individual title) is VP'd, I get a letter to pay for fire insurance, by insurer appointed by bank.

Letter states that insurer will charge the cost to the bank (the loan account).

I then asked the bank how should I pay - do I bank it in into the loan account?

Surprisingly, here's what I got:
- To pay, one needs to go to branch because banking it in into the loan account might get it treated as loan advance payment instead (this I understand)
- What surprised me was I was told it's not uncommon for one to not pay the cost of annual fire insurance. The bank will consider it as outstanding charges associated to the loan account (but not part of the loan), and it is exempted from interest
- The cost is simply accumulated over the years, borne by the bank (so the insurance is always valid over the years), and when the homeowner settles the loan in the future, he / she must also settle the outstanding fire insurance cost accumulated over the years, interest free!

I'm curious if this is true, since one would think bank would try to charge interest on pretty much anything!

Yes

This post has been edited by mini orchard: Sep 14 2022, 03:27 PM

Thanks for confirming! I learnt something new today!

Huh...I also face this.

Received letter for insurance. but the letter say will debit from loan acc.

So means no need pay also can?

Yes, as per my finding when I called the bank, and as per the reply given by fellow forumer above. But safest best is to call your bank!