Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney
Rental yield vs mortgage cash flow analysis determines if your Singapore property investment generates positive cash flow after loan payments. This cluster focuses on calculating net cash flow for investors eyeing multiple property financing or building a property empire financing strategy. It links to our pillar guide on Property Investment Financing Complete Guide Singapore | Homejourney for full coverage.
Why Rental Yield vs Mortgage Matters in Singapore
Singapore's property market offers moderate rental yields of around 3% for private residential properties, lower for HDB flats.[1] Investors must compare this against mortgage costs to ensure positive cash flow, especially under Total Debt Servicing Ratio (TDSR) limits set by MAS at 55% of gross income.[2] With private home prices projected to rise 3% in 2026 due to lower interest rates, cash-positive investments are key for portfolio financing and several properties loan strategies.[5]
Homejourney prioritizes your safety by verifying data and providing transparent tools. Use our bank rates page to compare DBS, OCBC, UOB rates instantly.
Key Concepts: Rental Yield and Mortgage Cash Flow
Rental yield is annual gross rent divided by property price, expressed as a percentage. For example, a $1.5M condo renting at $5,000/month yields ($60,000 / $1,5M) x 100 = 4% gross.[2] Net yield subtracts expenses like maintenance and property tax.
Mortgage cash flow is rental income minus loan repayments, taxes, and upkeep. Positive cash flow occurs when rent exceeds outflows; negative requires topping up. Singapore banks offer SORA-linked floating rates (3M SORA + 0.60% at DBS) or fixed rates (2.50% for 2 years).[2]
The chart below shows recent interest rate trends in Singapore:
As seen, rates have stabilized around 3%, impacting cash flow calculations.[2]
Step-by-Step Cash Flow Analysis Framework
Follow these actionable steps for Rental Yield vs Mortgage: Cash Flow Analysis:
- Calculate Gross Rental Yield: (Annual Rent / Purchase Price) x 100. Hougang/Punggol averages 3.56%.[2]
- Estimate Expenses: 20-30% of rent for agent fees, repairs, vacancy (5%).
- Project Mortgage Payments: Use Homejourney's mortgage calculator. For $1.2M loan at 3% over 25 years: ~$5,700/month.
- Net Cash Flow: Net Rent - Mortgage - Taxes. Aim for +$500/month minimum.
- Stress Test: Add 1-2% to rates per TDSR rules.
This framework suits multiple property financing. Check eligibility on Homejourney bank rates.
Singapore-Specific Factors in Cash Flow
HDB loans offer higher LTV (up to 90% for first-timers) vs banks (75%), but cap at 2.6% fixed.[2] Investors face ABSD (17% for third property), limiting portfolio financing. Use CPF for downpayments, but Ordinary Account only for interest/service charges.
Real example: $1.8M Punggol condo (3.56% yield) rents $6,500/month.[2] Bank loan ($1.35M at UOB 2.85% fixed): $6,200/month. Net cash flow: +$200 after $1,100 expenses. View similar via Homejourney property search.
For several properties loan, see our guide: Financing Multiple Investment Properties Singapore: Homejourney's Complete Guide 2026.
Real-World Example: OCR Condo Investment
Consider a $1.4M 2-bed OCR condo near Hougang MRT (3min walk). Rent: $4,500/month (3.86% gross yield).[2] Downpayment: 25% ($350K, use CPF). Loan: $1.05M at OCBC 3M SORA +0.7% (~$5,200/month).
Annual breakdown:
- Gross Rent: $54,000
- Expenses: $13,000 (tax, maintenance)
- Net Income: $41,000
- Mortgage: $62,400
- Cash Flow: -$21,400/year (-$1,783/month)
Negative? Refinance via Homejourney's multi-bank tool or target higher-yield areas like Punggol. Apply with Singpass on our bank-rates page for offers from 10+ banks.
Optimizing for Positive Cash Flow
Insider Tip: Target RCR/OCR for 3.5%+ yields (e.g., Sengkang vs CCR's 3.09%).[2] Lock fixed rates now (DBS 2.50%) before SORA rises. For property empire financing, structure via cross-collateralization but watch TDSR.
Practical tips:
- Compare rates: DBS, UOB, HSBC on Homejourney.
- Factor ABSD/LTV: Details in LTV & ABSD for Investment Property Guide | Homejourney.
- Post-purchase: Budget for aircon services to maintain tenant appeal.
Disclaimer: This is educational; consult Homejourney Mortgage Brokers for personalized advice. Rates as of 2026; subject to MAS changes.[2]
FAQ: Rental Yield vs Mortgage Cash Flow
1. What is a good rental yield in Singapore?
Gross yields average 3.29%, with OCR/RCR up to 3.69%. Net yields: 2-2.5% after costs. Use Homejourney calculator for precision.[2]
2. How does TDSR affect multiple property financing?
TDSR caps debt at 55% income. Second+ properties face lower LTV. Simulate on our tool.[2]
3. Bank loan or HDB for investors?
Banks for flexibility (SORA rates); HDB for citizens (lower rates, higher LTV). Compare partners like Maybank, CIMB via Homejourney.[2]
4. Can I achieve positive cash flow in 2026?
Yes, in high-yield areas with low LTV. Private rents stable post-2024 dip.[2][3]
5. How to apply for several properties loan?
Submit once on Homejourney with Singpass; get offers from DBS to RHB. Safe, verified process.
Master Rental Yield vs Mortgage: Cash Flow Analysis with Homejourney for trusted, transparent investing. Start with our bank rates comparison and pillar guide for your property journey.
