For Singapore investors, the key question is simple: does your rental yield comfortably exceed your mortgage and other costs, and by how much each month? When you properly compare rental yield vs mortgage through a structured cash flow analysis, you can quickly see if a property will be positive cash flow, breakeven, or a monthly drain on your finances.
This focused guide is part of Homejourney’s broader mortgage and investment pillar, where we help Singapore buyers and investors understand loans, risk, and cash flow before they commit. Here, we go deep into Rental Yield vs Mortgage: Cash Flow Analysis so you can evaluate each deal clearly and safely.
What “Rental Yield vs Mortgage” Really Means in Singapore
In the Singapore context, “rental yield vs mortgage” is about comparing your net rental yield (after realistic costs) against your effective mortgage cost (interest plus principal repayment and loan-related costs). The goal is to understand your monthly cash flow and long‑term risk.
Because private residential rental yields in Singapore are typically around 3–3.5% gross, while home loan rates in 2025–2026 have been in the 1.3–2.5% range depending on package and bank, the spread can be quite tight.[1][4] Small changes in vacancy or interest rates can turn a “good yield” into negative cash flow if you don’t run the numbers carefully.
Homejourney’s focus on user safety means we always encourage investors to stress‑test their loans, not just chase the highest yield. A property that barely breaks even in today’s low‑rate environment may struggle if SORA or fixed rates climb.
Key Concepts: Gross Yield, Net Yield & Mortgage Cost
Before you compare rental yield vs mortgage, you need three numbers:
- Gross rental yield = Annual rent ÷ Property price × 100%
- Net rental yield = (Annual rent – Annual costs) ÷ Property price × 100%
- Monthly mortgage payment = Based on loan amount, tenure, and interest rate
According to recent market analysis, gross rental yields for Singapore residential property average around 3.1–3.4%, with some mass‑market areas like Hougang / Punggol / Sengkang achieving slightly higher yields circa 3.6%.[1][6] These numbers are before agent fees, maintenance, property tax, and vacancy.
On the financing side, banks such as DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB and others commonly price floating packages off 1M or 3M SORA plus a spread, or offer short‑term fixed rates for 1–3 years, often in the 1.3–2.5% band in late 2025–2026.[1][4] HDB’s concessionary rate remains 2.6% pegged at 0.1% above CPF OA.[1]
On Homejourney’s bank rates page Bank Rates , you can see up‑to‑date packages across DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank and Citibank, then plug these into our mortgage calculator Bank Rates to estimate your monthly repayments.
Understanding Interest Rates & SORA for Investors
Most rental property mortgages today are either:
- Fixed‑rate packages for 1–3 years, then convert to floating
- Floating‑rate packages pegged to SORA (Singapore Overnight Rate Average) plus a bank spread
SORA is published daily by MAS and reflects actual overnight interbank transactions in Singapore dollars. Banks typically quote packages like “3M SORA + 0.6%” for an investment property loan, and your effective rate will move as SORA moves. For investors, this affects whether your rental yield still covers your mortgage after a rate hike.
The chart below shows recent interest rate trends in Singapore:
Use this as a visual sense check: if you are locking in a 2‑year fixed rate when SORA is already low, think carefully about what happens when it normalises higher later, especially if your yield margin is thin.
Step‑by‑Step: How to Analyse Rental Yield vs Mortgage Cash Flow
Here is a practical framework you can use on any investment, whether you’re eyeing a one‑bedder in Paya Lebar, an OCR condo in Sengkang, or a city‑fringe unit near Redhill.
Step 1: Estimate Realistic Monthly Rent
Start with recent transactions for similar units (size, age, distance to MRT). In many city‑fringe condos around Alexandra/Queenstown, a 1‑bedder might rent in the S$3,300–S$3,800 range depending on renovation and furnishings, while in Punggol a similar size may fetch S$2,500–S$2,900.
Be conservative: assume 5–10% below top‑of‑market asking rents to reflect negotiation and weaker months. Also factor in realistic vacancy of at least 1 month every 1–2 years, especially in estates where new supply is coming in according to URA launches Projects Directory .
Step 2: Compute Gross & Net Rental Yield
Suppose you buy a S$1,400,000 two‑bedder near Bartley MRT. You expect rent of S$4,300/month (S$51,600/year).
- Gross yield = 51,600 ÷ 1,400,000 × 100% ≈ 3.69%
Next, estimate annual costs:
- Condo maintenance: S$350/month ≈ S$4,200/year
- Property tax (non‑owner‑occupied, higher rate bracket)
- Landlord insurance (if any)
- Minor repairs & aircon servicing (budget at least S$1,000–S$1,500/year)
- Agent fees (e.g. one month’s rent every 2 years = S$2,150/year on average)
For aircon, I see many landlords in older condos underestimating cost. In humid estates like Pasir Ris or Woodlands where aircon runs almost every night, tenants expect regular servicing. You can manage cost by booking reliable servicing via Homejourney’s partner network Aircon Services and building this into your cash flow assumptions.
Let’s assume total annual non‑financing costs of S$10,000.
- Net rental income = 51,600 – 10,000 = S$41,600
- Net rental yield = 41,600 ÷ 1,400,000 × 100% ≈ 2.97%
Step 3: Work Out Your Monthly Mortgage
Assume you take a second property loan of 75% LTV: S$1,050,000 over 25 years, with a 3‑year fixed rate at 1.8% from one of the major banks (e.g. DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB or similar – actual rate depends on profile and market).
Your monthly repayment at 1.8% over 25 years is around S$4,300/month. Of this, part is interest cost, and part is principal repayment which builds your equity.
For cash flow analysis, investors often focus on:
- Interest = true cost of borrowing (compare vs net yield)
- Total instalment = actual monthly cash outlay (critical for TDSR & affordability)
You can get precise numbers using Homejourney’s mortgage calculator on the bank rates page , which breaks down interest vs principal over time.
Step 4: Calculate Monthly Cash Flow
Continuing the example:
- Monthly rent: S$4,300
- Monthly non‑financing costs: S$10,000 ÷ 12 ≈ S$830
- Monthly mortgage: S$4,300
So:
- Monthly net cash flow = 4,300 – 830 – 4,300 = –S$830 (negative)
Even though your gross yield (3.69%) is higher than the nominal rate (1.8%), once you account for full instalments and running costs, you are still cash‑flow negative each month. This is normal in Singapore, especially for newer condos and higher‑priced units.
Many investors accept short‑term negative cash flow in exchange for:
- Principal repayment (forced savings)
- Potential capital appreciation
- Hedging against inflation in rents
But from a safety perspective, Homejourney recommends you test a scenario where interest rises by 1–1.5 percentage points, rent drops 5–10%, and vacancy increases. If your finances are tight under those conditions, the risk may be too high.
Regulatory Constraints: TDSR, LTV, ABSD & CPF Rules
Even if your yield vs mortgage maths looks good, MAS and IRAS rules can heavily influence your actual return from a rental property mortgage.
TDSR & MSR
The Total Debt Servicing Ratio (TDSR), currently capped at 55%, limits your total monthly debt obligations (including the new investment property loan) to 55% of your gross monthly income, as set by MAS. For HDB or EC buyers, the Mortgage Servicing Ratio (MSR) caps your housing loan obligations at 30% of your gross monthly income.
For investors with existing loans (car, personal, or first home mortgage), this can materially reduce how much you can borrow for your second property loan, which then affects your leverage and cash flow. Homejourney’s eligibility calculator factors in TDSR/MSR so you can see realistic loan amounts instantly.
LTV & ABSD for Investment Properties
For a second or third residential property, Loan‑to‑Value (LTV) limits and Additional Buyer’s Stamp Duty (ABSD) are crucial. LTV for a second property is lower than for the first, meaning you must put in more cash/CPF and borrow less, which can improve cash flow but reduces leverage.
ABSD, payable upfront, adds to your effective property cost and reduces your true net yield. For a deep dive on current LTV caps and ABSD rates for investors, refer to our focused guide: LTV & ABSD for Investment Property: 2026 Guide LTV & ABSD for Investment Property: 2026 Guide | Homejourney .
Using CPF for Investment Property
CPF OA can be used for downpayment and servicing the loan of your investment property, but only after meeting certain requirements (e.g. Basic Retirement Sum set aside, Valuation Limit and Withdrawal Limit rules). Overusing CPF for an investment property can “lock up” retirement funds in an asset that may be volatile.
Always cross‑check latest CPF and HDB rules on the official sites, and if you are unsure, seek advice from a licensed financial adviser or Homejourney mortgage broker via our loan application flow Bank Rates .
Choosing the Best Bank as a Property Investor
From a pure cash flow angle, the best bank for a property investor in Singapore is the one that gives you:
- A competitive rate structure (especially after year 2–3)
- Good spread over SORA for floating packages
- Reasonable repricing policies and low clawbacks/penalties
- Flexible partial prepayment options
But “best” also depends on whether you prioritise:
- Fixed rate stability from banks like DBS, OCBC, UOB and HSBC
- Lower spreads on SORA packages from banks such as Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, or Citibank
Our detailed comparison of bank offerings for investors – Best Bank for Property Investors in Singapore 2026 – is available here: Best Bank for Property Investors in Singapore 2026 | Homejourney Guide . Use it alongside the live rates on the Homejourney bank rates page Bank Rates to shortlist your preferred investor mortgage bank.
Practical Insider Tips from the Ground
From walking the estates and talking to landlords in areas like Sengkang, Punggol and Tampines, a few practical patterns stand out:
- Near‑MRT OCR units (e.g. Sengkang MRT, Punggol MRT) often have very steady demand from young families and expats who prefer being 5–8 minutes’ walk to the station. This reduces vacancy risk, which is key when yield and mortgage cost are close.
- City‑fringe one‑bedders near Redhill, Queenstown, and Kallang often achieve slightly better rent‑per‑square‑foot, but tenant turnover can be higher, so you must budget more for agent fees and minor touch‑ups between tenancies.
- Old freehold walk‑ups in central locations can show high headline yields, but stair‑access, older pipes, and higher maintenance issues eat into real cash flow. Landlords here are often surprised by repair costs that wipe out a “4.5% gross yield” very quickly.
