Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney

Rental yield vs mortgage cash flow analysis reveals whether your Singapore property investment generates positive cash flow after loan payments. For investors, a strong rental yield (average 3.29% in 2025) must exceed mortgage costs to ensure profitability[3][2]. Homejourney simplifies this with tools to compare bank rates from DBS, OCBC, UOB and more.

This cluster article dives into tactical cash flow calculations for buy-to-let properties, linking back to our pillar guide on Property Investment Financing Complete Guide Singapore. Understand Singapore-specific factors like TDSR, LTV limits, and SORA rates to make confident decisions in a trusted environment.

What is Rental Yield vs Mortgage Cash Flow?

Rental yield measures annual rental income as a percentage of property value: Gross yield = (Annual Rent / Property Price) x 100[3]. Net yield subtracts expenses like maintenance and taxes. Mortgage cash flow compares this income against loan repayments, property tax, and fees to determine monthly surplus or deficit.

In Singapore, average gross rental yields are 3.29% in 2025, with highs of 4.07% in District 2 (Tanjong Pagar) and lows of 3.09% in Orchard[3][2]. For investment property loans, compare net yield against your effective mortgage rate (e.g., SORA + 0.30%-0.65%, around 3.6%-3.95%)[1][2]. Positive cash flow occurs when net rental income exceeds total outflows.

Singapore Mortgage Rates and SORA Trends

Current private property resale rates: fixed 2.00%-2.30% (2-3 years), floating SORA + 0.30%-0.65% (SORA ~3.3%)[1]. HDB loans remain at 2.6% p.a., but investors typically use bank loans for buy-to-let mortgages[1].

SORA (Singapore Overnight Rate Average) is the key benchmark for floating-rate investor mortgages. The chart below shows recent interest rate trends in Singapore:

As seen in the chart, SORA has stabilized around 3.3% in late 2025, impacting cash flow for rental property financing[1]. View live rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more on Homejourney's bank rates page.

Step-by-Step Cash Flow Analysis Framework

Follow these actionable steps for rental yield vs mortgage cash flow analysis:

1. Calculate Gross Rental Yield: (Annual Rent x 12 / Property Value) x 100. Example: S$3,000/month rent on S$600k condo = (36,000 / 600,000) x 100 = 6% gross[1].
2. Deduct Expenses for Net Yield: Subtract 20-30% for maintenance (S$300/month), property tax (S$200), agent fees, vacancy (5%). Net yield ~3.29% average[1][3].
3. Estimate Mortgage Payment: Use 75% LTV for second property (TDSR applies). S$450k loan at 3.8% (30 years) = ~S$2,100/month[1].
4. Compute Monthly Cash Flow: Net Rent - Mortgage - Other Costs. Positive if >S$0.
5. Factor Regulations: ABSD 30% for third property, MSR/TDSR caps at 30%/55% of income. Use Homejourney's mortgage calculator.

Real Singapore Examples: HDB vs Private Property

HDB 4-Room Resale (S$500k, e.g., mature estate like Toa Payoh): Rent S$2,500-2,800/month (yield 4-5%)[1]. Bank loan S$375k (75% LTV) at 3.8% = S$1,750/month. Total costs ~S$1,950 (incl. S&C S$100). Cash flow: +S$550-850/month[1]. Insider tip: Toa Payoh yields beat new towns due to expat demand near Braddell MRT (5-min walk).

Private Condo (S$600k, 3-bed in Hougang/Punggol, yield 3.56%): Rent S$2,800-3,200. Loan S$450k = S$2,240/month + S$550 other costs = S$2,790 total. Cash flow: Near parity (~S$0 to +S$150)[1][2]. Central districts like District 9-11 (3.5% yield) often show rental advantage[1].

For multiple properties, see our guide on Financing Multiple Investment Properties. PRs face higher ABSD; reference LTV & ABSD for Investment Property.

Key Considerations for Buy-to-Let Investors

• TDSR Impact: Rental income counts at 70% towards serviceability (MAS rules). Ensure yield covers 120% of mortgage for safety.
• CPF Usage: Limited for investment properties; cash-heavy for investors.
• Break-Even: HDB 3-4 years, condos 8-12 years with 2-4% appreciation[1].
• Risks: Vacancy (target <5%), rate hikes (track via Homejourney SORA tool).

Compare best bank loans on Best Bank Loans for Property Investors. Homejourney verifies data for trusted decisions.

Practical Tips for Positive Cash Flow

1. Target high-yield areas: Hougang (3.56%), Woodlands (3.83%)[3]. Search properties on Homejourney property search.
2. Lock fixed rates (2.0-2.3%) if SORA rising[1].
3. Use Homejourney's multi-bank application: One click via Singpass auto-fills income/CPF for DBS, UOCB, etc.
4. Budget 25% buffer for maintenance; link to aircon services post-purchase.
5. Refinance if rates drop—our step-by-step guide simplifies it.

Disclaimer: This is general guidance; consult professionals. Rates as of late 2025[1][2].

FAQ: Rental Yield vs Mortgage Cash Flow

1. What is a good rental yield in Singapore?
Average 3.29%; good is 4%+ in areas like District 2 or Hougang. Net yield should beat mortgage rate by 1%[3].

2. How does TDSR affect investor mortgages?
Rental income at 70%; total debt <55% income. Calculate on Homejourney's eligibility calculator.

3. HDB vs Condo for cash flow?
HDB wins (+S$550/month); condos parity. Check projects directory for data.

4. Can I use CPF for buy-to-let?
Yes, but limited; prioritize bank loans via Homejourney for best rates.

5. How to apply for investment property loans?
Compare on Homejourney bank rates, apply multi-bank with Singpass.

Master rental yield vs mortgage cash flow analysis with Homejourney's transparent tools. Start with our bank rates comparison or pillar guide on property investment financing for full insights. Build wealth safely—trust Homejourney.

References

1. Singapore Property Market Analysis 3 (2025)
2. Singapore Property Market Analysis 2 (2025)
3. Singapore Property Market Analysis 1 (2025)