IO Loan Singapore: Investment Property Interest-Only Guide | Homejourney
The definitive 2026 guide to interest-only loans for Singapore investment properties, helping investors maximize cash flow safely through Homejourney's verified insights.
Executive Summary
An interest-only loan (IO loan) for investment property in Singapore allows investors to pay only interest for an initial period, minimizing monthly outgoings and maximizing cash flow for rental income or further investments. This pillar guide covers everything from eligibility under TDSR and LTV rules to bank comparisons like DBS, OCBC, and UOB, with real 2026 examples.
Homejourney prioritizes your safety by verifying rates from major banks and offering Singpass-enabled applications. Use our bank-rates page to compare IO options instantly and calculate affordability.
Table of Contents
- What is an Interest-Only Loan in Singapore?
- Eligibility for IO Loans on Investment Properties
- Benefits and Risks of IO Loans
- How IO Loans Work: Structure and Calculations
- Singapore-Specific Regulations: TDSR, LTV, ABSD
- Top Banks Offering IO Loans: Rates and Promotions 2026
- Maximizing Cash Flow with IO Loans
- Real-World Examples: IO Loans for Singapore Properties
- Refinancing into IO Loans
- FAQ: Interest-Only Loans for Investment Properties
- Next Steps with Homejourney
What is an Interest-Only Loan in Singapore?
An interest-only loan (IO loan Singapore) is a mortgage where borrowers pay only the interest portion for a fixed period, typically 1-5 years, before principal repayments begin. For investment property interest only financing, this structure is ideal as it aligns low payments with rental income, helping investors preserve capital.
In Singapore, IO loans are offered by banks like UOB, DBS, and OCBC for private properties, not HDB flats. Unlike standard amortizing loans, no principal is reduced during the IO phase, keeping monthly costs low.[2][8]
Homejourney verifies these packages daily on our bank-rates page, ensuring you access the best IO loan Singapore rates from trusted partners.
Key Features of IO Loans
- IO Period: 1-5 years, after which it converts to principal + interest (P&I).
- Eligibility: Typically for completed private properties valued S$1M+.
- Rates: Pegged to 3M SORA + margin (e.g., +0.7% p.a.).[2]
- Min Loan: S$250k-S$1M depending on bank.[2]
Eligibility for IO Loans on Investment Properties
IO loans for investment property interest only require meeting MAS Total Debt Servicing Ratio (TDSR) at 55% of gross income and Loan-to-Value (LTV) limits. Singapore citizens/PRs get up to 75% LTV on first investment property; foreigners 60%.[2]
Additional Buyer’s Stamp Duty (ABSD) applies: 17% for citizens buying second property in 2026. Banks assess rental income at 80-100% for TDSR if tenancy proven.
Insider Tip: Use Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator with Singpass for instant TDSR checks, factoring in your CPF and income.
IO Loan Eligibility Table
| Borrower Type | Max LTV (Investment Property) | TDSR Threshold |
|---|---|---|
| Singapore Citizen (2nd Property) | 75% | 55% of gross income |
| PR (1st Investment) | 70% | 55% |
| Foreigner | 60% | 55% |
Benefits and Risks of IO Loans
Benefits: Maximize Cash Flow
Maximize cash flow property strategy shines with IO loans, as payments can drop 30-50% vs P&I. For a S$1.5M condo at 3M SORA +0.8% (est. 2% p.a.), monthly IO is ~S$2,500 vs S$7,500 P&I over 25 years.
- Preserve liquidity for more properties or renovations.
- Match low payments to rental yields (e.g., 3-4% in Tanjong Pagar).
- Tax-deductible interest for investment properties.
Risks to Watch
Principal remains unchanged, leading to a 'balloon' payment or higher P&I later. Rising SORA (from 1.2% in Dec 2025) could increase costs.[4] Homejourney advises stress-testing at +3% rates via our calculator.
How IO Loans Work: Structure and Calculations
During IO phase, pay interest only: Monthly Interest = (Loan Amount × Annual Rate) / 12. Post-IO, re-amortizes over remaining tenure (max 35 years or age 75).[2]
Example: S$1M loan at 2% IO for 3 years. Monthly: S$1,667. After, P&I ~S$4,200 over 32 years.
The chart below shows recent interest rate trends in Singapore:
As seen, SORA at 1.2% supports low IO costs, but monitor via Homejourney.[4][9]
IO vs P&I Comparison Table (S$1M Loan, 2% Rate, 25 Years)
| Type | Year 1 Monthly | Total Interest (First 3 Yrs) |
|---|---|---|
| IO Loan | S$1,667 | S$60,000 |
| P&I Loan | S$4,200 | S$45,000 (but principal reduces) |
Singapore-Specific Regulations: TDSR, LTV, ABSD
MAS TDSR caps debt at 55% income; MSR for HDB at 30% (IO ineligible for HDB). LTV tiers: 75% first private, drops to 45% for third+.[2] ABSD: 17% citizens second property.
CPF Ordinary Account (2.5% interest) usable up to loan amount. For details, see 投资物业的LTV和ABSD完整指南：Homejourney 2026 ">investment property LTV and ABSD guide.
Homejourney ensures compliance by pre-verifying applications with partner banks.
Top Banks Offering IO Loans: Rates and Promotions 2026
UOB offers IO in private home loans: Year 1 3M SORA +0.5%, min S$250k, up to S$2.5k cashback for S$1M+.[2] DBS, OCBC similar, pegged to SORA/COF.[8]
Compare all on Homejourney's bank-rates page: DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong, Citibank.
Promotion example: UOB S$1.5M loan gets Takashimaya vouchers S$1k (till Apr 2026).[2]
2026 IO Loan Rates Snapshot (Est. 3M SORA 1.2%)
- UOB: +0.7% Year 2 = 1.9% p.a.[2]
- HSBC: 1M SORA + margin ~1.17% base.[9]
- Lowest floating: 1M SORA +0% =1.14%.[8]
Maximizing Cash Flow with IO Loans
Maximize cash flow property by pairing IO with high-yield areas like District 15 (3.5% avg rent). Net cash flow = Rental Income - IO Payment - Maintenance.
Example: S$1.2M Jalan Besar condo, S$4.5k rent, S$2k IO = S$2.5k positive. See 租金收益vs房贷：新加坡正现金流计算完全指南 | Homejourney ">rental yield vs mortgage guide.
Strategy: Use savings for downpayment, IO for ops cash. Homejourney's property search filters by yield.
Real-World Examples: IO Loans for Singapore Properties
Case 1: Investor buys S$1.8M Tanjong Pagar condo (75% LTV = S$1.35M loan). IO at 1.9%: S$2,140/mth. Rent S$6k = S$3.86k cash flow. ABSD S$216k paid.[1]
Case 2: Refinance S$7M landed (existing S$1M loan) to IO bridging for business: 70-80% release ~S$4.9M, short-term.[1]
These align with Best Bank Loans for Property Investors 2026 | Homejourney ">best bank loans for investors.
Refinancing into IO Loans
Switch to IO if rates drop (SORA 1.2% lows).[4] Banks allow 1 free conversion post-lock-in.[2] Costs: Valuation S$500-1k, legal fees S$2k.
Homejourney simplifies: One-click multi-bank apps via https://www.homejourney.sg/bank-rates, Singpass auto-fill.
FAQ: Interest-Only Loans for Investment Properties
Can I get an IO loan for HDB investment?
No, IO loans are for private properties only. HDB loans are fixed 2.6% P&I.[6]
What is the max IO period in Singapore?
Typically 2-5 years, bank-dependent. UOB up to lock-in 2 years.[2]
Does rental income count for TDSR?
Yes, 80-100% if tenancy agreement provided.
IO loan vs bridging loan?
IO for long-term investment; bridging short-term (e.g., 70-80% LTV).[1]
Best bank for IO loan Singapore 2026?
Compare on Homejourney: Lowest ~1.14% floating.[8] Factors: Cashback, conversion options.
Can foreigners get IO loans?
Yes, up to 60% LTV for new purchase.[2]
How to calculate IO cash flow?
Use Homejourney calculator: Input property price, rent, rate.
Next Steps with Homejourney
1. Compare IO loan Singapore rates: https://www.homejourney.sg/bank-rates.
2. Calculate eligibility: Calculator.
3. Search properties: Property search.
4. Apply via Singpass for offers from DBS, UOB, etc.
Homejourney builds trust with verified data, user feedback-driven tools, and priority on your secure journey. Disclaimer: Not financial advice; consult professionals.
