Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney

Rental yield vs mortgage cash flow analysis determines if Singapore investment properties generate positive cash flow after loan payments. For investors, gross yields average 3.36% while mortgage rates start at 1.35% fixed, but factors like LTV investment property limits (55-75%) and down payments impact profitability.[1][3]

This cluster article dives into tactical cash flow strategies, linking back to our pillar guide on LTV and ABSD for Investment Property. Homejourney prioritizes your safety with verified data and tools like our bank rates page for real-time comparisons from DBS, OCBC, UOB, and more.

What is Rental Yield vs Mortgage Cash Flow Analysis?

Rental yield measures annual rent as a percentage of property value: (Annual Rent / Property Price) x 100. In Singapore, Q3 2025 yields hit 3.36% island-wide, higher in Hougang/Punggol/Sengkang at 3.60%.[1] Mortgage cash flow subtracts monthly payments, taxes, and costs from rent to reveal net income.

Why it matters: Singapore's Total Debt Servicing Ratio (TDSR) caps payments at 55% of income, while Additional Buyer's Stamp Duty (ABSD) adds 17% for second properties. Positive cash flow ensures sustainability amid SORA fluctuations.[1]

Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator instantly models your scenario using Singpass for verified CPF and income data.

Singapore LTV Limits for Investment Properties

Second property LTV and investor LTV limit are lower for investments: 55% for bank loans on non-owner-occupied private properties, versus 75% for owner-occupied.[1] HDB investments face stricter rules under MSR (30% of income).

Loan to value investment drops further for third properties (45%) or foreigners (35%). Down payment for investors: 25% cash minimum plus CPF, totaling 45% for second homes.[1] See our guide on LTV for Investment Property Singapore.

Owner-occupied HDB/private: Up to 75-90% LTV
Second property LTV: 55% bank loan
Down payment investor: 25% cash + balance CPF/stamp duties

These rules from MAS protect against over-leverage, aligning with Homejourney's trust-focused approach.

Current Mortgage Rates and SORA Trends

Singapore banks offer fixed rates from 1.35%-2.40% (1-3 year lock-in) and floating at 1M/3M SORA + 0.25%-1% (around 1.65%-2.30%). HDB loans at 2.60% push refinancing to banks.[1][3]

SORA has fallen to 3-year lows, boosting lending by 15.3% in 2024.[1] Floating suits investments with rental offsets; fixed for stability.

The chart below shows recent interest rate trends in Singapore:

As seen, rates dipped in late 2025, favoring cash flow. Compare live rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank on Homejourney's bank rates page.

Cash Flow Calculation: Step-by-Step Example

Consider a $1.2M condo in Punggol (yield 3.60%). Annual rent: $43,200 ($3,600/month).[1]

Down payment investor: 45% ($540K: 25% cash $300K + CPF/stamp)
Loan: 55% LTV ($660K at 2% over 25 years)
Monthly mortgage: ~$2,780 (use Homejourney calculator)
Other costs: Maintenance $300, property tax $200, vacancy 5% ($180)
Net cash flow: $3,600 - $2,780 - $500 - $180 = $140/month positive

Yield beats mortgage (3.60% > 2%), but TDSR applies. For multi-properties, see Financing Multiple Investment Properties.

Actionable Tips for Positive Cash Flow

Target high-yield areas like Hougang (3.60%) via Homejourney property search.[1]
Refinance HDB to bank loans: Save 1%+ vs 2.60%.[1]
Lock floating rates if selling soon (sale penalty waivers).[3]
Factor ABSD (17% second property) and agent fees.
Track SORA on Homejourney; apply multi-bank via Singpass for best offers.

Insider tip: Punggol MRT (Punggol Green, 5-min walk) units rent faster to families.[1] Always verify with professionals; Homejourney connects you safely.

Risks and Best Practices

Rents rose 2.4% YoY Q3 2025, but vacancy or SORA spikes erode yields (poor 3.13% globally).[1][6] TDSR/MSR enforce safety; exceed and loans deny.

Disclaimer: This is educational; consult advisors. Homejourney verifies data for trust.

Frequently Asked Questions

What is the investor LTV limit in Singapore?
55% for second private properties, 45% third+; HDB stricter.[1]

Second property LTV vs owner-occupied?
Owner-occupied up to 75%; investments capped lower to curb speculation.[1]

Is rental yield beating mortgage rates now?
Yes, 3.36% yields > 1.35-2.30% rates, but net after costs varies.[1][3]

How to calculate down payment investor?
25% cash min + CPF for balance on 45% total.[1]

Best banks for investment loans?
Compare DBS, OCBC, UOB on Homejourney bank-rates; rebates up to $2,800.[3]

Master Rental Yield vs Mortgage: Cash Flow Analysis with Homejourney. Start with our bank rates tool, search properties at property search, and link back to pillar Best Bank Loans for Property Investors for full insights.