Saturday, March 31, 2018

HDB Flat Purchase Chronicles - Prelude - The Expected Financing and Expenses

This article will be part of a series that shares my journey to becoming a homeowner for the first time. There will be more article(s) that not only covers the actual cost, but also the process of purchasing resale flat using the HDB Resale Portal.

To date, my wife and I have paid the Option-to-Purchase (OTP) Deposit, and are awaiting the result of the HDB Resale Application. The below breakdown is our expected expense overall - actual amount may differ.



Resources:

Flat Purchase
1) Flat Purchase Price $335,000
- OTP Grant Deposit $1000 (Paid via Cash)
- OTP Exercise Deposit $4,000 (Paid via Cash)
- Balance $330,000 to be paid for via CPF, Housing Grants, Housing Loan and Cash

Additional Costs expected
2) Valuation Report $120 (Cash, includes GST)
3) Buyer Stamp Duty $5,000 (Pay via CPF)
- First $180,000: 1% $1,800
- Next $155,000: 2% $3,200
4) Legal Fee for OTP (Pay via CPF) $699
- Acting in Purchase: $321
- Acting in Mortgage: $332
- 7% GST: $46
5) Legal Fee for Mortgage: $900 (Pay via Cash)
6) Caveat Fee: $130 (Pay via Cash)
7) Title Search Fee: $10 (Pay via Cash)
8) Resale Application Fee $80 (Paid via Cash)

Total Upfront Damage expected for Flat itself
Cash: Approx $37,140
- $35,900 contributes to the Flat Purchase Price
- $1,240 added cost
CPF: Approx $45,000
- $39,300 contributes to the Flat Purchase Price
- $5,700 added cost

Flat Maintenance Cost
a) Mortgage: $1020 monthly (for 25 years, subject to early repayment)
b) Home Protection Scheme with a coverage of 100% Mortgage: $190 annually (for 22 years)
c) Basic Fire Insurance: $6 every 5 years

Stay tuned for more updates!

Effect of Compounding Part 2 - Early Repayment for a HDB Housing Loan

In a previous post I mentioned I will revisit the effect of repaying HDB Housing Loan earlier (link here).

I believe thoughts of repaying the HDB Loan must have crossed the minds of some homeowners out there to finish paying off the mortgage earlier with the goal of becoming debt-free. This post will explore the example of doing early repayment for a $300,000 HDB Housing Loan. Let's call this homeowner with this loan Mr A.



If we recall the formula of compounding:
  • Paying off a $300,000 HDB Housing Loan (prevailing interest rate of 0.1% above CPF-OA Interest, which is 2.6% as of this post) means you will pay a total of ~$413,500. This means you will be paying ~38% worth of interest over the course of 25 years. Because you are regularly paying off the mortgage periodically, the effect of compounding is reduced and has the effect of compounding for 12.5 years instead of 25 years.
Mr A is paying off his mortgage of ~$1378 monthly.

At the end of his first year of paying off his HDB Housing Loan, Mr A has received a handsome amount of $10,000 for performance bonus at work. Keen on being debt-free earlier, he has decided to use this proceed to do an early repayment of his housing loan.

Using the compounding formula, paying off $10,000 in his second year will have the effect of paying off ~$18,000 on his mortgage. $18,000 divided by $1378 means he has shaved 13 months off!

Consequently, the later you do an early repayment, the less effect it will have on your overall mortgage.

Year - Year of mortgage the early repayment is done.
10K worth - Amount the $10,000 is equivalent to


Years
10K worth
2
18046.35
3
17589.03
4
17143.31
5
16708.88
6
16285.45
7
15872.76
8
15470.53
9
15078.49
10
14696.38
11
14323.96
12
13960.97
13
13607.19
14
13262.36
15
12926.28
16
12598.71
17
12279.45
18
11968.27
19
11664.98
20
11369.38
21
11081.27
22
10800.46
23
10526.76
24
10260
25
10000

Homeowners (both current and prospective), if you are considering early repayment, do consider the following:
  • HDB Housing Loan: There is a minimum sum ($5000) and advance notice required (1 month).
  • Bank Loan: Likely you will need to pay a penalty sum unless the loan has some terms and conditions that waives this off. Check if the penalty exists for your planned bank loan (Mr 15HWW shared about this as well.)
  • It is also an option to use the sum intended for early repayment to do investment to get a higher return instead.
Thanks for reading!

Saturday, March 24, 2018

The Process of Marriage and applying for Long-Term Visit Pass for my wife (non-citizen spouse)

My wife has finally gotten her Long-Term Visit Pass (LTVP)! :) I feel so happy for ourselves that this day has finally come.

My motivation for writing this article is to aid other couples who experiences similar cases to us - we hope this information will help you, and if there is any way we can further improve the information given in this post, please let us know, and well wishes to the other similar couples out there! :)



The process is broken down into the following stages:
1) Permission to Marry*
2) Pre-Marriage Assessment for LTVP*
3) Marriage
4) Formal Application of LTVP after marriage
5) Appointment 

* Permission to Marry and Pre-Marriage Assessment for LTVP can be done concurrently,

Permission To Marry
Due to her being a Work Pass holder, we had to request from Controller of Work Passes (Ministry of Manpower) permission to marry.

As given on MOM website (link):
If you are a current or former Work Permit holder who wishes to marry a Singapore citizen or permanent resident (PR), you must seek approval from MOM.
However, you do not have to apply for approval if you:
  • Do not hold a Work Permit (e.g. you are an S Pass or Employment Pass holder).
  • Are a former Work Permit holder whose last held work pass was upgraded to Employment Pass or S Pass.
  • Are a former Work Permit holder who is now a Singapore citizen or Singapore PR.

Download the form here and follow the instructions given.

We received our letter of approval after 3 weeks.

Pre-marriage Assessment of LVTP
It was advised to us that doing the pre-approval would help us expedite our waiting period. With this done, the approval of LTVP will be up to 6 weeks. If application for LTVP was done without completing this step, the approval will take up to 6 months instead. Successful application will result in a Letter of LTVP Eligibility (LLE) given. Link to the portal here.


It took 3 weeks overall before the letter was sent to us. Do note that this letter is valid for 1 year.

Marriage
We then proceeded to plan and make arrangements for our marriage after permission to marry was granted.

This is broken down into these steps (link here for steps in ROM website):
- Deciding on our solemnisation date/time/venue*
- Reaching and getting a licensed solemniser (If you are planning to have your solemnisation outside ROM, we recommend Mr Pua, HP: 9634 4085).
- File for Notice of Marriage (to be done no later than 21 days in advance. Can be up to 3 months in advance)*
- Document Verification a few days before our marriage
- Solemnisation

* If you plan to have your solemnisation at ROM, please note it can only be done on weekdays during their opening hours, and the slots tend to be fully booked for up to 2 months!

We kept the event simple and gave our solemniser a $138 ang pow for his service.

Formal Application of LTVP
On the evening of the day we got married, I immediately get to work in applying for the LTVP (link to the e-application portal here). It prompted us to enter the reference no. for our approved Pre-marriage Assessment for Long-Term Visit Pass.

You will find most of the details are furnished from the Pre-marriage Assessment (if you had done it), with details that needs to be updated such as:
- Marriage Status (obviously, hahaha)
- Giving reasons if staying apart
- Any other changes

We were granted her In Principle Approval (IPA) in 2 weeks after applying - much faster than we anticipated. A payment of $90 was done for this process. We then made an e-appointment with ICA and prepared our documents we will need on the day itself (see next section for documents required - this can also be found in your IPA document).

On the day of Appointment... 
We headed to Level 4 of ICA Building and scanned the Approval Letter to get ourselves in queue.

The process required us to visit three counters:
- One for submitting in the required documents
- One for verification of the details and scanning thumbprint
- And finally, one for pass collection

During verification of the details, we had some slight complications with us staying apart, which we had to explain to the staff our circumstances (inconvenience due to lack of my own room at home and her staying at her aunt's place. We then mitigated by mentioning we are in the process of getting our own home.) Thankfully I had my Option-to-Purchase (OTP) with me and I gave her my photocopied document as proof. This made the process smoother.

We had to write a hand-written letter addressed to the ICA officer explaining our circumstances, endorsed with both our name, signature and IC.

After handing in the letter, we waited about a 30 minutes before we collected her new IC and temporary Letter of Consent and then happily make our way home.

Necessary documents to prepare for our case:

General
- LTVP Approval Letter
- Signed copy of Form 14(a)
- Signed copy of Form 14(b)

Applicant
- Work Pass (original and photocopy)
- Passport (Original and Photocopy)
- Letter Of Employment (Original, but bring photocopy just in case) (valid only within 1 month from date of letter)
- Last 6 months Payslip (original and photocopy)
- Medical Report
- Passport Photo taken within the last 3 months

Sponsor (in this case, myself)
- NRIC (original and photocopy)
- Letter Of Employment (Original, but bring photocopy just in case) (valid only within 1 month from date of letter)
- Last 6 months Payslip (original and photocopy)
- Last 12 months CPF Contribution

Additional documents that is useful to have:
- Evidences that you are purchasing a home for your spouse and yourself (In this case, I used my OTP form)
- Where any document we have mentioned only original copy, it will be safer to have a photocopy as well. We did this but was a bit surprised by them taking our original Letter of Employment.

Overall, the whole process took us a total of 4.5 months, but the process can be expedited further for marriage arrangement (the marriage process took 2.5 months).

Other helpful things to note:
- There are plenty of photocopy shops 5 minutes away from the ICA building. If you had forgotten to make any photocopies, don't panic and visit these shop(s). It costs 20 cents a copy.
- Keeping the documents in a ring file with file pockets also helps to keep your documents organised.
- It's said that the age gap of the couple also matters (the closer it is, the faster it will be).

Saturday, March 17, 2018

Why I am bullish on Alliance Mineral Assets Limited

This post is quoted and based on an analysis done by someone at InvestingNote, and I have trouble finding the link; if you are the original writer, please let me know so I can give credit to you. 

Update 23-03-2018: Found the post! https://www.investingnote.com/posts/690047
Stage 1 production = 155,000 tpa

Stage 1 production with Lithium Fine Circuit (LFC) = 220,000 tpa (Taken from the interview with TAW CEO) by end of 2018

Stage 2 production with LFC = 440,000 tpa (Taken from the interview with TAW CEO) by Jun 2019

Production rate will be almost 3 times the rate of stage 1  production. The timeline is realistic and I trust Mark Calderwood in delivering it based on the track record.

P/E is based on price of S$0.395.

Stage 1 - During Stage 1 production which is now, the project will be generating a gross profit of (US$880-US$429) x 155,000 = US$69.9m or S$91.6m. AMAL gets 50% which is S$45.8m. At current price, we are trading at 4.78 times PE ratio.

Stage 1 (with LFC) - Upon addition of LFC by end of this year, we will be looking at a production rate of 220,000tpa and All-In-Sustaining Cost (AISC) should drop to about US$342 per ton according to the PFS. Project gross profit will be about US$83.4m or S$109.2m. AMAL gets 50% which is S$54.6m. At current price, we are trading at PE ratio of 4.0 times.

Stage 2 production is the highlight. (expecting double production to 440ktpa according to Mark Calderwood)

Using contract price of US$880 per ton, assuming we increase Life-of-mine significantly, our All-in-sustaining-cost should drop significantly and be comparable to Altura Mining which is about A$316 per ton according to their DFS. So as a rough guide, we can use A$316 per ton or US$248 per ton for calculation for stage 2.

Gross profit should be estimated at US$195.9m or SGD256m. AMAL 50% share is S$128m. PE ratio at current price is 1.7 times. To put it in another word, it means that if AMAL were to trade at just 10 times of its stage 2 production earnings (in future), the price ought to be around $2.31.

Several Catalysts coming up
- Binding Tantalum offtake with HC Starck (March 2018)
- Bald Hill Reserves upgrade (April 2018)
- Lithium Fines Circuit (By end 2018)
- Stage 2 2nd DMS plant (By June 2019)

(end of edited quoted post)

Addedeum by Marksman

Correct me if I'm wrong...

a) First of all, the above seems to have calculated pricing the share using gross profit to calculate P/E and hence share price. If the production cost above includes all other expenses (such as building the fines circuit and 2nd DMS plant), then he should be referring to net profit instead, otherwise the above calculation probably has to be tweaked in favour of a reduction.

Having said that, this does not affect my opinion on AMAL and I see strong upside.

b) Tantalum Offtake with HC Starck
Secondly, the above also has not seemed to include sales of tantalum concentrate?

The ex-CEO once mentioned sales of the tantalum offtake can cover the production cost of the spodumene concentrate.

HC Starck has entered into a non-binding agreement to purchase a minimum of 600,000 lbs of tantalum in aggregate from April 2018 to 31 December 2020, while AMAL and TAW continues to be in discussion with other third parties for excess tantalum concentrate. (link here)

As there is no established contract price for this offtake at the moment, I'll annualise the production rate above and base the expected revenue off a range of tantalum concentrate price.

600,000 lbs from April 2018 to 31 December 2020 = Approx 232,250 lbs annually.



Price (USD/lbs)
50
55
60
65
70
75
80
85
90
95
100
Annual Revenue from Tanatalum Sales to HC Starck (USD)
11.61m
12.77m
13.95m
15.09m
16.25m
17.41m
18.58m
19.74m
20.90m
22.06m
23.22m

If sales from all tantalum offtake is sufficient to cover production costs, then based on stage 2 production cost, overall tantalum production rate should be at least over 10x this amount?

c) Other things to look out for:
- Price of Lithium. Burwill's contract is 5 years. After the 2-year fixed price of USD880/ton, they will renegotiate the price. In spite of the development with SQM that will ramp up their output, I expect Demand will continue to outdo Supply and hence Lithium price to remain bullish and add further upside for TAW/AMAL thereafter.
- Forex. The strength of AUD and USD will probably also play a part.
- The strength of Burwill as a company, being the only customer for their Lithium concentrate.
- AMAL's direction going forward. What is the business direction beyond owning Bald Hill Mine?

Disclaimer: The above should not be used as a decision to solicit buy/sell activity. Use all information at your own discretion and DYODD