Rental Yield vs Mortgage: Cash Flow Analysis in Singapore – Quick Answer
Rental Yield vs Mortgage: Cash Flow Analysis is about comparing your rental income against your monthly mortgage, taxes, and other costs to see if an investment property is cash flow positive (covering its own loan) or if you need to top up monthly from your salary or savings.
In Singapore, where gross rental yields for private homes hover around 3–3.5% while mortgage rates are typically in the 1.5–3% range depending on package and year, understanding this relationship is critical before you commit to multiple property financing or building a “property empire” with several loans.[1][3][7]
This article is a focused cluster guide supporting our main Homejourney pillar on safe property financing and portfolio strategy: we zoom into cash flow math, show you step-by-step calculations, and explain how to use Homejourney tools to decide if a property’s rental yield can safely support its mortgage.
How Rental Yield and Mortgage Work Together
At its core, your investment property cash flow is:
Net Monthly Cash Flow = Rental Income – (Mortgage + Maintenance + Taxes + Other Costs)
To judge if an investment is safe, especially when you are exploring multiple property financing or portfolio financing, you must understand three key metrics:
- Gross rental yield = Annual rent ÷ Property price
- Net rental yield = (Annual rent – annual costs) ÷ Property price
- Debt service ratio = Monthly mortgage ÷ Monthly income
In Singapore, private condos typically achieve gross rental yields of about 3–3.5%, with some city-fringe areas like Hougang/Punggol/Sengkang and Alexandra/Commonwealth slightly higher than average.[1][7] This is lower than many global markets due to our high property prices, which makes precise cash flow analysis even more important.
Current Interest Rate Context: Why It Matters for Cash Flow
Your mortgage cost depends heavily on interest rates. After peaking near 4% in recent years, Singapore home loan rates have been trending down, with many bank packages now under 3% and some promotional fixed or SORA-pegged packages closer to the mid-1–2% range depending on loan size and tenure.[1][3][5] HDB concessionary loan remains at 2.6%, pegged at 0.1% above CPF Ordinary Account (OA) interest.[1]
Homejourney tracks real-time 3M and 6M SORA movements and bank spreads on our bank rates page Bank Rates , so you can see how changing benchmarks may impact your monthly cash flow.
The chart below shows recent interest rate trends in Singapore:
Lower rates generally mean smaller monthly instalments and easier cash flow, but you should still stress-test your portfolio at higher assumed rates (e.g. 3.5–4%) to stay safe under MAS rules.
Core Regulatory Framework: TDSR, MSR, and CPF Usage
Before diving into examples, you must understand the main rules that govern how much you can borrow and how much of your income can go towards loan servicing:
- Total Debt Servicing Ratio (TDSR) – MAS caps your total monthly debt obligations (all property loans, car loans, credit cards, etc.) at a fixed percentage of your gross monthly income when buying investment property. For investment loans, banks must also use a minimum interest rate floor for stress testing, even if your actual package rate is lower.[3]
- Mortgage Servicing Ratio (MSR) – Applies only to HDB flats and ECs bought from developers. MSR limits the portion of your gross monthly income that can be used to service the mortgage for those properties.[3]
- Loan-to-Value (LTV) limits – For bank loans, the maximum LTV is typically 75% for the first housing loan, 45% for the second, and 35% for the third and subsequent loans, with minimum cash and CPF down payment components.[3] HDB loans can go up to 80% LTV.
- CPF usage – You can use CPF OA savings for down payment and monthly instalments, subject to Valuation Limit and Withdrawal Limit rules and the need to set aside your Basic Retirement Sum when you approach age 55 (HDB and CPF Board guidelines apply).
For investors planning to hold several properties on loan, these rules interact with your cash flow: a high rental yield property with manageable mortgage makes it easier to stay within TDSR while adding another property to your portfolio. For deeper details, refer to our LTV and ABSD strategy article LTV and ABSD for Investment Property: Homejourney’s Safe 2026 Playbook .
Example 1: OCR Condo in Punggol – Can Rental Cover the Mortgage?
Let’s walk through a real-world style example using typical 2025–2026 figures from the market data and bank packages available.
Scenario Setup
Imagine you’re buying a 2-bed, 700–750 sq ft private condo in Punggol, near Waterway Point and Punggol MRT. From what I’ve seen walking through those developments and talking to landlords, advertised rents for such units typically fall around S$3,000–S$3,400 per month, depending on renovation and distance to the MRT. In newer integrated projects right above the MRT, tenants are often willing to pay at the higher end because they can walk downstairs to NTUC FairPrice, food options, and the bus interchange within 2–3 minutes.
Assumptions:
- Purchase price: S$1,100,000
- Loan-to-value: 75% (first housing loan, bank)
- Loan amount: S$825,000
- Tenure: 25 years
- Interest rate (floating SORA package): 2.0% p.a. (illustrative)
- Monthly rent: S$3,200
Step 1 – Gross Rental Yield
Annual rent = S$3,200 × 12 = S$38,400
Gross rental yield = 38,400 ÷ 1,100,000 ≈ 3.49%
This is slightly above the overall Singapore average of around 3–3.36%, consistent with data showing OCR and city-fringe condos can outperform the national mean.[1][7]
Step 2 – Monthly Mortgage
Using a standard amortisation formula for S$825,000 at 2.0% over 25 years, your monthly instalment is roughly S$3,500–3,550.
You can verify this precisely using Homejourney’s mortgage calculator on our bank rates page , which auto-applies current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, and others.
Step 3 – Other Monthly Costs
- Condo maintenance fee: ~S$250–S$350
- Property tax (non-owner-occupied): averaged monthly, perhaps ~S$200–S$350 for this value range
- Insurance + occasional repair buffer: ~S$100
Conservatively, other costs might total around S$600–S$800/month.
Step 4 – Cash Flow
Total outflow ≈ S$3,500 (mortgage) + S$700 (other costs mid-point) = S$4,200
Net monthly cash flow = Rent S$3,200 – S$4,200 = –S$1,000 (negative cash flow)
This is a textbook Singapore situation: even with a decent yield, the mortgage plus taxes push you into negative monthly cash flow. Many local investors I meet in areas like Punggol, Sengkang, and Tampines still accept a small monthly top-up because they are banking on long-term capital appreciation and principal repayment. However, when planning several properties on loan, this can strain your TDSR quickly.
Example 2: Higher Yield City-Fringe vs Lower Rate Mortgage
Now, let’s compare with a slightly smaller but higher-yielding unit in Alexandra/Commonwealth, where the Global Property Guide data shows yields slightly above average.[1]
Scenario Setup
- Purchase price: S$950,000
- Loan: 75% → S$712,500
- Tenure: 25 years
- Interest rate (promotional SORA+spread): 1.7% p.a. (illustrative)
- Monthly rent: S$3,000 (smaller unit but strong demand due to proximity to CBD and One-North)
Step 1 – Gross Yield
Annual rent = 3,000 × 12 = S$36,000
Gross yield = 36,000 ÷ 950,000 ≈ 3.79%
Step 2 – Monthly Mortgage
At 1.7% over 25 years, monthly instalment is roughly S$2,900–2,950.
Step 3 – Other Costs
- Maintenance: ~S$280
- Property tax: averaged ~S$250–S$350/month
- Insurance/repairs buffer: S$100
Total non-mortgage costs ≈ S$650–S$750.
Step 4 – Cash Flow
Total monthly outflow ≈ S$2,950 + S$700 = S$3,650
Net cash flow = S$3,000 – S$3,650 = –S$650
The higher yield and slightly lower rate improve the picture but still do not fully cover the mortgage plus costs. This is why most Singapore investors I’ve spoken with in Queenstown and Commonwealth still plan for a monthly top-up of a few hundred dollars—even when their unit is tenanted continuously due to nearby MRT access and short ride to the CBD.
Safe Cash Flow Rules When Financing Multiple Properties
When you move from one investment property to multiple property financing, small cash flow gaps compound quickly. Homejourney recommends a set of conservative guidelines, especially for younger investors or families with dependants.
1. Aim for a Clear Cash Flow Buffer
- Target a monthly cash flow buffer of at least S$500–S$800 per property (from your income and savings) after all mortgages and expenses, assuming realistic vacancy of 1–2 months every 2–3 years.
- Stress-test at an interest rate that is 1.5–2% higher than your current package to account for future hikes.
2. Consider Net Yield, Not Just Gross
A condo near an MRT station like Boon Keng or Aljunied might show attractive headline rents, but after adding maintenance, property tax, and occasional aircon service costs (which can be significant in older units), net yield drops noticeably. Use a simple framework:
- Net yield ≥ mortgage rate: Potential to be near cash-flow neutral if leverage is moderate.
- Net yield < mortgage rate: Expect ongoing monthly top-ups; treat it as a long-term equity-building strategy.
Homejourney’s projects directory Projects Directory provides consolidated data on asking prices and typical rents so you can derive more realistic net yields.
3. Plan Around TDSR for Portfolio Financing
Investors building a property empire financing structure—holding 3 or more properties—must watch how each new mortgage affects TDSR. Even if rental technically covers the loan, banks still use conservative income recognition for rent and apply a stress interest rate when computing TDSR.
For a safe approach:
- Keep your total property loan instalments well below the MAS TDSR cap.
- Assume a vacancy rate and lower rent than your initial asking price in your calculations.
- Read our dedicated guides on financing multiple investment properties Financing Multiple Investment Properties in Singapore: Homejourney’s Safe Invest... and safe portfolio structures Financing Multiple Investment Properties Safely with Homejourney .
Using Homejourney Tools for Rental Yield vs Mortgage Decisions
Homejourney is built for safe, transparent decision-making. If you are comparing two potential investment units—say, a 3-room HDB in Sengkang vs a 1-bed condo in Pasir Panjang—you can:
Step 1 – Check Bank Rates and Estimate Monthly Instalments
Visit the bank rates page Bank Rates to:
- View current packages from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, Citibank and more in one place.
- Compare fixed vs SORA-pegged floating options and see which provides more stable cash flow.
- Use the built-in mortgage calculator to compute your monthly instalment precisely for each property price.
