Rental Yield vs Mortgage: Cash Flow Analysis in Singapore
Understanding Rental Yield vs Mortgage: Cash Flow Analysis is critical if you want a safe, sustainable property investment in Singapore. For every unit you buy, the key question is simple: does your rental income cover your loan payment (and other costs), and by how much? Homejourney helps you answer this with transparent data, calculators, and bank rate comparisons so you can avoid overstretching and focus on positive cash flow property decisions.
This article is a focused cluster guide supporting our main pillar on safe mortgage and investment financing with Homejourney. For a full end-to-end overview of Singapore property loans, LTV, and ABSD, refer to our main pillar guide 新加坡房产投资融资完整指南：Homejourney安全投资全攻略 .
Core Concepts: Rental Yield, Mortgage, and Cash Flow
In Singapore, most private residential properties generate a gross rental yield of around 3%–3.5% per year based on current market data.[1][8] At the same time, bank mortgage rates for 2025–2026 have been trending down from peaks of about 4% to sub‑3% levels for many fixed packages, with floating packages pegged to SORA plus a bank spread.[1][3] Your cash flow outcome depends on how these two numbers interact.
Key definitions (Singapore context):
- Gross rental yield: Annual rent ÷ Property purchase price × 100%. This ignores costs like maintenance, property tax, and interest.
- Net rental yield: (Annual rent − all running costs) ÷ Purchase price × 100%.
- Mortgage payment: Monthly principal + interest you pay to the bank or HDB, usually over 20–30 years.
- Cash flow: Monthly rent − (mortgage + all other expenses). Positive = surplus; negative = you top up from salary or CPF.
In practice, banks in Singapore price home loans either as fixed-rate packages (commonly locked for 1–3 years) or floating packages based on 1‑month or 3‑month Compounded SORA plus a spread, often up to about 1%.[1] HDB concessionary loans remain at 2.6%, which is typically higher than the best private bank packages when rates are low.[1]
Interest Rates and SORA: Why They Matter for Cash Flow
Because most investors rely on leverage, your investment return on mortgage is highly sensitive to interest rates. As MAS policy and global conditions have shifted, mortgage benchmarks have moved from roughly 4% peaks to lower levels, improving affordability and potential cash flow for investors.[3][5]
The chart below shows recent interest rate trends in Singapore:
When you compare rental yield vs mortgage, a falling SORA environment can turn a marginally negative cash flow into a positive one, while a rising environment can do the opposite. This is why Homejourney provides real-time SORA tracking and up-to-date bank rates so investors can time refinancing and new purchases more safely.
Step-by-Step Cash Flow Framework (Local Example)
Use this simple 5-step framework to analyse rental income vs loan payment for any property in Singapore. The numbers below are realistic for a city-fringe condo near Paya Lebar or Queenstown based on recent rent and yield data.[1]
1. Estimate gross rental income
Assume you are buying a 2‑bedroom condo at S$1.6 million in a city-fringe area like Alexandra / Commonwealth, where gross yields of around 3.5% are achievable in some projects.[1] A 3.5% gross yield implies annual rent of about S$56,000, or roughly S$4,600 per month before vacancy.
Insider tip: In areas with strong MRT connectivity (e.g., Queenstown MRT, Paya Lebar MRT), one- and two-bedroom units often see better rentability than larger units, because of demand from young professionals and expats working in CBD or Paya Lebar Quarter.
2. Factor in vacancy and running costs
It is safer to assume at least 1 month of vacancy per year. That reduces effective rent to about 11 months × S$4,600 ≈ S$50,600 (S$4,600 × 11). Next, deduct:
- MCST fees: ~S$250–S$400/month for typical condos
- Property tax (non-owner-occupied, progressive scale under IRAS)
- Landlord insurance, minor repairs, and aircon servicing (e.g., quarterly servicing for tenants)
As a quick working estimate, many local investors I speak to around East Coast and Bukit Panjang set aside 15%–20% of gross rent for all these costs.
3. Calculate your mortgage instalment
Assume a 75% Loan-to-Value (LTV) bank loan for your first property (standard MAS limit for private property), so loan amount is S$1.2 million.[3] At an interest rate of 2.8% (typical of current fixed packages below 3%[3]) and a 25‑year tenure, your monthly instalment is around S$5,600–S$5,700.
You can verify this precisely using Homejourney’s mortgage calculator at . It auto-computes monthly payments for different tenures and interest rates, so you can stress-test at 3%, 4%, or even higher.
4. Derive monthly cash flow
Using the above assumptions:
- Effective monthly rent after vacancy: ≈ S$4,600
- Less 20% for costs: ≈ S$3,680 net rent
- Less mortgage payment ≈ S$5,650
Cash flow ≈ S$3,680 − S$5,650 = −S$1,970 per month. This is a negative cash flow property even though gross yield appears decent. Many new investors in areas like Tampines or Sengkang are surprised when they do this full calculation.
This is why you must evaluate rental yield vs mortgage in detail, not just look at headline yield. You may still accept slight negative cash flow if your long-term capital appreciation thesis is strong, but you should be very intentional about it.
5. Scenario-test for safer investing
Change the assumptions and see how your cash flow shifts:
- If interest rates drop to 2.2%, monthly instalment may fall by several hundred dollars, improving cash flow.
- If rent increases 10% (common in tight rental markets), net cash flow improves substantially.
- If you increase your downpayment (e.g., 55% LTV instead of 75%), your instalment reduces a lot but your cash-on-cash return may change.
Homejourney’s Bank Rates page lets you plug in different interest rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, and others so you can see how choosing a cheaper package improves your cash flow and risk profile.
HDB vs Private: Rental Yield Mortgage Dynamics
HDB and private condos behave very differently for rental yield mortgage analysis due to rules and demand patterns.
HDB flats
- Financing: Eligible Singapore Citizens can take an HDB loan up to 80% LTV (subject to income and criteria).[3] Interest is fixed at 2.6%, pegged at 0.1% above CPF OA rate.
- Occupancy rules: Minimum Occupation Period (MOP) of 5 years before you can fully rent out the flat (for most cases).
- Yields: Typically slightly lower than private condos but purchase price is also lower; net cash flow can be more manageable for some upgraders.
For example, a 4‑room HDB in Punggol at, say, S$650,000 with monthly rent of S$2,800 after MOP may give moderate yields, but the absolute mortgage is smaller. Many families I have spoken to in Punggol and Sengkang deliberately keep their first HDB as a long-term rental asset because the monthly loan is far lower than a condo of equivalent size.
Private condos
- Financing: MAS LTV cap of 75% for first housing loan with banks.[3]
- Yields: Typical gross yields around 3%–3.5% for private units in Singapore.[1][8]
- Flexibility: Easier to rent to expats and professionals around CBD, Paya Lebar, One‑North, and Jurong East hubs.
While private condos often have better rental demand in central and city-fringe locations, the higher price and slightly lower yields mean careful cash flow analysis is crucial.
CPF Usage, TDSR/MSR, and Safe Cash Flow Planning
When comparing rental yield vs mortgage, you also must understand CPF usage and MAS income limits, because they affect how much of your loan is paid from cash vs CPF and your risk exposure.
TDSR (Total Debt Servicing Ratio): MAS caps your total monthly debt obligations (including mortgages, car loans, and credit cards) at a percentage of your gross monthly income. This ensures you do not over-leverage.
MSR (Mortgage Servicing Ratio): For HDB and EC purchases, MSR restricts the portion of your income that can go to mortgage payments for those properties. This further controls risk for owner-occupiers.
Using CPF OA to service the loan may reduce cash strain, but remember CPF used plus accrued interest must be returned if you sell. A property that is only marginally cash flow positive but heavily CPF‑funded might still leave you with less net proceeds at sale than you expect.
Homejourney’s eligibility calculator at builds in these regulatory limits so your calculations align with current MAS and HDB rules. This gives you a more realistic view of safe borrowing levels.
Positive Cash Flow Property: What Is “Safe” in Singapore?
In today’s market, a truly positive cash flow property (after full mortgage, property tax, MCST, and vacancy) is not easy to find in prime districts, given yields of roughly 3%–3.5% and past mortgage peaks near 4%.[1][3] That said, you can tilt the odds in your favour.
Characteristics of safer, cash flow-resilient properties:
- Purchase price below or around area median (you are not overpaying for a "premium" stack with the same rent as neighbours).
- Strong rental demand drivers nearby (MRT within 8–10 minutes walk, employment hubs like Changi Business Park or One‑North, schools, amenities).
- Layouts that tenants prefer (efficient 2‑bedroom, no oversized balconies that don’t command higher rent).
- Ability to refinance to lower rates when market turns, improving cash flow.[3][5]
If you cannot achieve outright positive cash flow, many conservative Singapore investors target a small, manageable shortfall that they are comfortable covering from salary, ideally less than 10%–15% of their net monthly income. Homejourney strongly encourages investors to stress-test their numbers to higher interest rate scenarios before committing.
For a structured view of safe leverage and ABSD implications, refer to our detailed article "LTV & ABSD Rules for Safe Investment Property Loans" LTV & ABSD Rules for Safe Investment Property Loans | Homejourney and "Rental Yield vs Mortgage Payment: Safe Investment Analysis with Homejourney" Rental Yield vs Mortgage Payment: Safe Investment Analysis with Homejourney .
Using Homejourney Tools for Rental Yield vs Mortgage Analysis
To turn this framework into a practical decision, you can leverage Homejourney’s verified tools and data. Homejourney prioritises user safety, so we focus on transparency and verification at each step.
- Compare bank rates in one place: View current home loan packages from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, and more at Bank Rates .
- Mortgage eligibility calculator: Estimate how much you can safely borrow and your monthly instalment instantly at .
- Multi-bank application with Singpass/MyInfo: Submit one application via Bank Rates , auto-fill your details securely using Singpass, and let our Homejourney Mortgage Brokers source offers from multiple banks for you.
- Property search within budget: Use Property Search to filter units based on price range and estimated mortgage, then overlay your rental yield assumptions.
- Project-level data: For deeper market analysis of particular condos or new launches, use Projects or Projects Directory to examine past transactions, sizes, and rentability.
Once you shortlist a few properties, run a side-by-side cash flow comparison using the same assumptions for vacancy, costs, and interest. This makes it much easier to see which unit is more resilient if rental demand softens or interest rates rise.
Local Insider Tips for More Accurate Cash Flow Estimates
Having walked projects from Sengkang and Hougang to Tanjong Rhu and Jurong East with investors over the years, I have seen how small local factors can impact cash flow.
- Walk the neighbourhood at night: In areas like Geylang or Little India, noise or nightlife can affect tenant profiles and rentability. A 10‑minute walk from the MRT might feel much longer late at night.
- Check peak-hour traffic: Near popular hubs like Bishan MRT or Serangoon Nex, traffic build-up and bus congestion can affect how tenants perceive convenience vs a quieter neighbourhood like Hillview.
