Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney
Rental yield vs mortgage cash flow analysis reveals whether Singapore investment properties generate positive cash flow after loan payments. In 2025, average gross rental yields stand at 3.29%, often barely covering mortgage costs at current rates of 2.96%-3.73%.[1][2]
This cluster dives into tactical cash flow calculations for investors, linking back to our pillar guide on Singapore Property Investment Strategies. Homejourney prioritizes your safety with verified data and tools like our bank rates page to compare DBS, OCBC, UOB, and more.
Understanding Rental Yield and Net Cash Flow
Rental yield measures annual rental income against property value, with gross rental yield at 3.29% island-wide in 2025 and net yield lower after expenses like maintenance and taxes.[2][3] For cash flow analysis, subtract mortgage payments, property tax, and management fees from rent to find true profitability.
Singapore's Total Debt Servicing Ratio (TDSR) caps debt at 55% of income, while Mortgage Servicing Ratio (MSR) limits HDB loans to 30%.[4] Investors face stricter rules: LTV investment property limits drop to 45-75% based on existing loans, requiring higher down payment investor cash.[4]
Gross vs Net Rental Yield Formula
Gross yield = (Annual rent / Property price) x 100. Net yield deducts costs: maintenance (1-2% of value), agency fees (1 month rent), and ABSD for second properties.[2] Non-residents pay 24% rental tax, eroding yields further.[2]
- High-yield districts: District 2 (Tanjong Pagar) at 4.07%, District 25 (Woodlands) at 3.95%.[2][3]
- Low-yield prime areas: Orchard/River Valley at 3.09%.[1]
- OCR hotspots: Hougang/Punggol at 3.56%, ideal for families near MRT.[1][3]
Homejourney's mortgage calculator factors in these yields with real-time 3M SORA rates for accurate projections.
Singapore Mortgage Rates and LTV Limits for Investors
Fixed-rate mortgages range 2.42%-3.50%, floating SORA-linked at 2.96%-3.73% in 2025.[1] For second property LTV, banks cap at 45% if you have an outstanding loan, or 25% for third properties—far below 75-90% for first homes.[4]
Investor LTV limit and loan to value investment rules from MAS ensure prudence: 5% cash downpayment minimum, rest CPF/cash.[4] Example: S$1.2M condo requires S$360K down (30%) at 75% LTV, but S$540K (45%) for investors with loans.
| LTV Type | Max LTV | Downpayment (Cash Min 5%) |
|---|---|---|
| First Home | 75% | 25% total |
| Investment (No Existing Loan) | 75% | 25% total |
| Second Property LTV (With Loan) | 45% | 55% total |
Data per MAS 2025 guidelines.[4] Check LTV for Investment Property Singapore on Homejourney for details.
Cash Flow Analysis: Step-by-Step Calculation
Assess if rental covers mortgage using this framework:
- Estimate rent: 2-bed OCR condo: S$4,000/month (S$48K/year).[1]
- Property cost: S$1.2M, gross yield 4% = S$48K matches.
- Mortgage: 45% LTV = S$540K loan, 25-year tenure, 3.2% rate = S$2,600/month (S$31K/year).
- Expenses: Maintenance S$5K, tax S$3K, vacancy 5% = S$10K total.
- Net cash flow: S$48K rent - S$31K mortgage - S$10K expenses = S$7K positive (0.58% net yield).
For District 2 high-yield: S$1M property, S$5,000 rent (S$60K/year), same loan = S$15K positive flow. Use Homejourney's bank rates to compare DBS (2.99% SORA) vs UOB (3.10%).
Real Example: Hougang Condo Investment
Hougang condo (3.56% yield): S$1.1M purchase, S$4,200 rent.[1] At investor LTV limit 45%, S$495K loan @3% = S$2,300/month. Net flow: S$4,200 - S$2,300 - S$400 expenses = S$1,500 positive monthly. Insider tip: Proximity to Hougang MRT (Exit A, 5-min walk) boosts tenant demand.
Negative flow common in CCR: Orchard unit at 3.09% yield struggles vs 3.5% mortgages. Always factor CPF usage limits and ABSD (17% for citizens' second property).
Actionable Tips for Positive Cash Flow
- Target OCR/RCR: Higher yields (3.5%+) vs lower entry prices. Search via Homejourney property search.
- Lock low fixed rates: Compare on Homejourney – apply via Singpass to DBS, OCBC, HSBC instantly.
- Minimize downpayment: Use max CPF for non-first loans, but retain cash for vacancies.
- Track SORA: Homejourney shows live rates; refinance if drops below 2.8%.
- Budget 1-2% for maintenance – link to aircon services post-purchase.
Disclaimer: This is educational; consult professionals. Rates per 2025 data, subject to change.[1] Homejourney verifies info for your trust.
FAQ: Rental Yield vs Mortgage Cash Flow
What is a good rental yield in Singapore 2025?
3-4% gross is solid; above 3.5% in OCR like Hougang beats average 3.29%.[1][2]
How does LTV affect investment cash flow?
Lower LTV investment property (45%) means higher down payments, reducing loan interest but needing more upfront cash.[4]
Can rental cover mortgage fully?
Yes in high-yield areas at <3.2% rates; use Homejourney calculator to simulate.
Second property LTV limits?
45% with existing loan; see our guide.[4]
Best banks for investor loans?
Compare DBS, UOCB, Standard Chartered on Homejourney bank rates – one-click multi-bank apps via Singpass.
Master cash flow with Homejourney: Start at our bank rates page, explore properties on search, and link back to the pillar for full strategies. Your trusted partner for safe investments.