Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney

Rental yield vs mortgage cash flow analysis determines if your Singapore property investment generates positive cash flow after loan payments. This cluster article breaks down calculations, Singapore-specific factors like SORA rates and TDSR, and actionable steps for investors. It supports our pillar guide on Financing Multiple Investment Properties Singapore: Homejourney 2026 Guide ">Financing Multiple Investment Properties Singapore, providing tactical insights for building a property portfolio safely via Homejourney.

What is Rental Yield vs Mortgage Cash Flow?

Rental yield measures annual rental income as a percentage of property value, while mortgage cash flow assesses if rent covers loan repayments and expenses. In Singapore, gross rental yields average 3.36% as of 2025, with higher yields in areas like Hougang/Punggol/Sengkang at 3.60%[1]. Compare this to current mortgage rates: fixed rates from 1.55%-2.40%, floating SORA + spread at 1.65%-2.30%[1].

Positive cash flow occurs when net rental income exceeds mortgage payments. Homejourney prioritizes your safety by verifying data from MAS and HDB sources, helping you avoid overleveraging under TDSR rules.

Key Concepts: Gross vs Net Rental Yield

Gross rental yield = (Annual rent / Property price) x 100. For a $1.2M condo renting at $4,000/month ($48,000/year), yield is 4%. But use net rental yield for true analysis: deduct property tax, maintenance, and vacancy costs[2].

Singapore property tax for investors is 12% on rent above $100,000/year (2026 rates). Maintenance averages $300-500/month for condos. Net yield often drops to 2-3%, critical for cash flow vs mortgage.

Mortgage rates tie to SORA: 3-month compounded SORA + 0.25%-1% spread. HDB loans at 2.60% are higher, pushing refinancing to banks like DBS or OCBC[1].

Singapore Mortgage Rates and Trends

Banks offer competitive rates in 2026: DBS fixed at 1.35% for Year 1 on loans over $1M, UOCB/OCBC at 1.50%, floating from 1M SORA +0.25% (~1.36%)[3]. For investment properties, interest-only (IO) loans maximize cash flow—see our guide on IO Loan Singapore: Maximize Cash Flow for Investment Property | Homejourney ">IO Loan Singapore.

The chart below shows recent interest rate trends in Singapore:

As seen, SORA has fallen to 3-year lows, boosting cash flow for leveraged properties[1]. Track live rates on Homejourney's bank rates page.

Cash Flow Analysis: Step-by-Step Calculation

Follow these steps for Rental Yield vs Mortgage analysis:

1. Estimate gross rent: Use URA data; e.g., 2-bed condo in Punggol: $3,500/month ($42,000/year)[1].
2. Calculate gross yield: Property $1.1M → 3.82%.
3. Deduct expenses: Tax $2,500, maintenance $4,800, vacancy 5% ($2,100) → Net rent $32,600 (2.96% net yield).
4. Mortgage payment: 80% LTV ($880,000 loan, 25 years, 2% rate) ≈ $3,700/month ($44,400/year).
5. Cash flow: Net rent - mortgage = -$11,800/year (negative). Switch to IO loan: interest ~$17,600/year → positive $15,000 cash flow.

This example shows IO loans for investors, but check MSR/TDSR (60% debt cap). Use Homejourney's mortgage calculator for instant eligibility.

Singapore-Specific Factors: LTV, ABSD, Multiple Properties

For multiple property financing, LTV drops to 50-75% on second+ properties; ABSD 17% for citizens on third[1]. Portfolio financing via banks like HSBC or Maybank allows several properties loan under one facility—ideal for property empire financing.

TDSR limits total debt at 55% income; investors offset with rental income (75% factored). Reference LTV & ABSD Guide for Singapore Investment Properties | Homejourney ">LTV & ABSD Guide and Straits Times Housing News ">Straits Times for updates.

Insider tip: Hougang yields 3.60% due to family demand near Kovan MRT (5-min walk); avoid lease decay properties (<60 years) for rentability[2].

Practical Tips for Positive Cash Flow

• Target yields > mortgage rate +1-2% buffer for expenses/vacancy.
• Choose floating rates for investments; fixed for owner-occupied[3].
• Refinance HDB to bank loans if >2.60%[1]. Compare DBS, OCBC, UOB on Homejourney bank rates.
• Apply multi-bank via Homejourney: One-click with Singpass auto-fill from DBS to CIMB.
• Search budget-fit properties on Homejourney property search.

Disclaimer: This is educational; consult Homejourney mortgage brokers for personalized advice. Rates fluctuate per MAS.

FAQ: Rental Yield vs Mortgage Cash Flow

1. Is 3.36% rental yield enough vs 2% mortgage?
Net yield after expenses may not cover full repayment, but IO loans can yield positive cash flow. Calculate on Homejourney.

2. Best financing for multiple properties?
Portfolio loans from UOB/HSBC; LTV 50%. See Financing Multiple Investment Properties: IO Loans & LTV Strategy ">IO Loans & LTV Strategy.

3. How does SORA affect cash flow?
Falling SORA (per chart) lowers payments, improving flow. Track on Homejourney.

4. HDB vs bank loan for investors?
Bank loans cheaper (1.65% vs 2.60%); higher LTV but TDSR applies.

5. When to refinance?
If rate >1.5% above market. Use Homejourney for multi-bank offers.

Master cash flow with Homejourney's verified tools for safe investing. Start at bank-rates or our pillar on Financing Multiple Investment Properties Singapore: Homejourney 2026 Guide ">multiple property financing. Trust Homejourney for transparent, user-first property journeys.

References

1. Singapore Property Market Analysis 1 (2026)
2. Singapore Property Market Analysis 2 (2026)
3. Singapore Property Market Analysis 3 (2026)