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 costs. In 2026, with average gross yields at 3.29% and mortgage rates from 1.14%, IO loans Singapore can maximize cash flow by avoiding principal repayments.

Homejourney prioritizes your safety with verified data and transparent tools. This cluster dives into tactical analysis, linking to our pillar on Singapore property investment financing. Use our bank rates page to compare DBS, OCBC, UOB rates instantly.

What is Rental Yield vs Mortgage Cash Flow?

Rental yield calculates annual rent as a percentage of property value: Gross yield = (Annual rent / Property price) x 100. Net yield subtracts expenses like maintenance and taxes. In Singapore, average gross rental yield is 3.29% in 2025, rising slightly in high-demand districts.[1]

Mortgage cash flow compares net rental income to loan costs. Positive cash flow occurs when rent exceeds interest, taxes, and fees. For investment property interest only loans, focus on interest-only payments to boost liquidity.

Singapore's TDSR (Total Debt Servicing Ratio) caps debt at 55% of income, while MSR (Mortgage Servicing Ratio) limits HDB loans to 30%. Always verify eligibility on Homejourney's mortgage calculator[6]

Why Cash Flow Analysis Matters for Singapore Investors

Low yields (3-4%) mean capital growth drives returns, but cash flow ensures you cover costs during voids or rate hikes.[2] Districts like 2 (Tanjong Pagar, 4.07%) offer top yields due to expat demand near CBD MRT.[1]

With SORA at ~3% in 2026, floating rates tie to 1M/3M SORA + spread. Fixed rates start at 1.30%.[6] Poor analysis leads to negative cash flow, as gross rent ignores property tax (4-16% of annual value) and agent fees (1 month's rent).

Insider tip: Target District 25 (Woodlands, 3.95%) for families near Admiralty MRT—lower entry prices yield better cash flow vs central areas.[1]

IO Loan Singapore: Maximize Cash Flow Property Strategy

Interest only loan (IO loan) lets investors pay only interest for 1-3 years, ideal for maximize cash flow property. Banks like DBS, OCBC offer IO for non-owner occupied properties up to 40-60% LTV, per MAS rules.

Connect to our IO Loan Singapore: Investment Property Interest-Only Guide | Homejourney ">IO Loan Singapore guide for details. Homejourney's multi-bank application via Singpass compares IO offers from UOB, HSBC, Standard Chartered instantly.

Singapore Mortgage Rates and SORA Trends

SORA (Singapore Overnight Rate Average) replaced SOR in 2024. Most loans are 3M SORA + 0.5-1.2% (effective ~2.8-4%). Fixed packages lock 1.30-2% for 2-3 years.[6]

The chart below shows recent interest rate trends in Singapore:

As seen, SORA stabilized post-2025 hikes. Track live rates on Homejourney bank-rates.

Step-by-Step Cash Flow Calculation

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

Estimate gross rent: District 2 condo, $1.2M, rents $5,000/month = $60,000/year. Gross yield: ($60K/$1.2M)x100 = 5% (optimistic; avg 4.07%).[1]
Deduct expenses: Property tax $6,000 (12% AV), maintenance $3,600, agent 1x rent $5,000 = Net rent $45,400. Net yield: 3.78%.
Loan costs: 75% LTV ($900K loan) at 3M SORA+0.8% (~3.5%) IO = $31,500/year interest.
Cash flow: $45,400 - $31,500 = +$13,900/year positive. Switch to P&I later for equity build.
Stress test: +1% rate hike = $40,500 interest; still +$4,900. Void 2 months? Breakeven.

Example: $1M District 14 unit (Eunos, 3.83% yield).[1] Rent $42K gross, net $32K post-tax. $750K IO loan @3.2% = $24K interest. Cash flow +$8K/year.

Use Homejourney's calculator for your scenario: homejourney.sg/bank-rates#calculator.

HDB vs Private Property Cash Flow

HDB minimum occupation period (MOP) blocks rentals; private condos allow immediate lease. ABSD 30% for second property impacts LTV.LTV & ABSD Guide for Singapore Investment Properties | Homejourney

Bank loans beat HDB (2.6% fixed) for investors—higher LTV, IO options. Compare on Homejourney: Maybank, CIMB often competitive for investors.

Risks and Optimization Tips

Vacancy risk high in oversupply areas; prioritize 98-100% rentability zones like Jurong (District 22, 3.72%).[2] Rates may rise—lock fixed if yield <4%.[1]

Target yields > mortgage rate +2% buffer.
Use CPF for deposit, but watch OA limits.
Refinance via Homejourney for better spreads.
Find properties on Homejourney search; maintain with aircon services.

Disclaimer: This is educational; consult Homejourney mortgage brokers or advisors. Rates as of Feb 2026.[6]

FAQ: Rental Yield vs Mortgage Cash Flow

What is a good rental yield in Singapore? 3-4% gross is average; >3.8% in top districts like Tanjong Pagar excellent for cash flow.[1]

Can I get an interest-only loan for investment property? Yes, from DBS/OCBC for 1-2 years, 40-60% LTV. Apply multi-bank via Homejourney.

How does TDSR affect cash flow? Caps total debt at 55% income; factor rental offset (60-80% countable).

Is 4% yield enough in 2026? Only if net > interest + expenses; many face negative after costs.[4]

Where to compare IO loan Singapore rates? Homejourney's bank-rates for real-time DBS-UOB-HSBC offers.

Master cash flow with Homejourney—your trusted partner for safe, verified property decisions. Explore our pillar on property investment financing and start at bank-rates today.