Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney

Rental yield vs mortgage cash flow analysis determines if your Singapore investment property generates positive income after loan payments. For investors, this comparison reveals whether rental income covers your investment property loan or buy to let mortgage, ensuring sustainable property investment financing.

At Homejourney, we prioritize your financial safety by verifying data from official sources like URA and MAS. This cluster article dives into tactical calculations, using 2025-2026 market data to help you decide. It connects to our pillar guide on Property Investment Financing Complete Guide Singapore for full coverage.

What is Rental Yield and Why Compare It to Mortgage Costs?

Rental yield is the annual rental income divided by property value, expressed as a percentage. In Singapore, average gross yields stand at 3.36% for private residential units as of Q3 2025, with higher spots like Hougang/Punggol/Sengkang at 3.60%[1].

Mortgage costs include interest and principal on your rental property financing or investor mortgage. Compare yield to mortgage rate: if yield exceeds after-tax mortgage cost plus expenses, you have positive cash flow.

Why it matters in Singapore: TDSR limits total debt to 55% of income, and ABSD adds 17% for second properties[1]. Use Homejourney's mortgage calculator to test scenarios instantly.

Singapore Rental Yields: Current Data and Hotspots

Q3 2025 URA data shows private rental index up 2.4% y-o-y, with non-landed at 2.7%[1]. Average rents: S$3,700 (USD 2,740) for 1-bed, S$4,750 (USD 3,520) for 2-bed[1]. Yields average 3.36%, better than global 3.13% but lower than Dubai's 8-10%[3][8].

Top areas for yields:

Hougang/Punggol/Sengkang: 3.60% – Family demand near MRT[1]
Alexandra/Commonwealth: 3.51% – Central, walk to Queenstown MRT (5 mins)[1]
OCR suburbs: Stable 3.0-3.5%, lower entry prices

Insider tip: Check URA's rental index for precise subzone data. HDB yields often 3-4%, private condos 2.5-3.5% due to higher purchase prices[1].

Current Mortgage Rates for Investment Properties

Singapore banks offer floating rates at 1M/3M SORA + 0.25-1.0%, around 1.65-2.30% net[1][4]. Fixed rates: 1.35-2.40% for 2-3 year lock-ins[4]. HDB loans at 2.60%, pricier for investors[1].

For buy to let, floating suits due to rental offset[4]. Minimum loans S$500k for best rates from DBS, OCBC, UOB[4]. View live rates from DBS, OCBC, UOB, HSBC, Standard Chartered on Homejourney's bank rates page.

The chart below shows recent interest rate trends in Singapore:

Rates hit 3-year lows in late 2025, boosting cash flow[1]. Refinance via Homejourney for multi-bank offers using Singpass.

Cash Flow Analysis: Step-by-Step Calculation

Follow these actionable steps for Rental Yield vs Mortgage: Cash Flow Analysis:

Calculate gross yield: (Annual rent / Purchase price) x 100. Example: S$48k rent on S$1.4M condo = 3.43%.
Deduct expenses: Maintenance (0.5%), agency (1 month/year), vacancy (5%), property tax. Net yield: ~2.5-3.0%.
Factor mortgage: 75% LTV for investors (TDSR applies). S$1.05M loan at 2.0%, 25 years: ~S$4,400/month (S$52.8k/year).
Cash flow: Net rent S$38k - Mortgage S$52.8k = -S$14.8k (negative). Need yield >3.5% post-tax for breakeven.

Real example: Punggol 3-bed condo, S$1.2M buy, S$4k rent (4% gross). After 2% mortgage, positive S$500/month cash flow. Use our eligibility calculator.

Singapore Investor Rules: LTV, ABSD, TDSR Impact

Investors face 75% LTV max (vs 90% owner-occ), 17% ABSD[1]. TDSR: Debt <55% income, MSR for HDB. CPF usable but with accrual interest.

Floating better for rentals as income buffers hikes[4]. See LTV & ABSD Guide and Best Bank Loans for Investors.

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

Practical Tips for Positive Cash Flow

Target 4%+ gross yields in Punggol or OCR[1].
Lock fixed if rates rise; track SORA on Homejourney.
Budget 20-25% downpayment cash[1].
Refinance every 2 years for rebates S$2k-2.8k[4].
Search budget-fit properties on Homejourney property search.

Multi-property? See Financing Multiple Properties 2026.

FAQ: Rental Yield vs Mortgage Cash Flow

Q: Is 3.36% yield enough for positive cash flow?
A: Rarely, after 2% mortgage + expenses. Aim 4%+ in high-yield areas like Hougang[1].

Q: Fixed or floating for buy-to-let?
A: Floating for flexibility, rental buffer[4]. Compare on Homejourney bank rates.

Q: How does TDSR affect investors?
A: Caps debt at 55% income; rentals count 75% toward servicing[1].

Q: Best banks for investor mortgages?
A: DBS/OCBC from 1.35% fixed[4]. Apply multi-bank via Homejourney Singpass.

Q: When to refinance?
A: Post-lock-in if SORA drops. Our brokers guide you.

Master Rental Yield vs Mortgage: Cash Flow Analysis with Homejourney for safe investing. Compare rates, calculate eligibility, and apply today at https://www.homejourney.sg/bank-rates. Explore our pillar on Property Investment Financing for more.