Rental Yield vs Mortgage: Cash Flow Analysis | Homejourney

Rental yield vs mortgage cash flow analysis reveals whether Singapore property investments generate positive cash flow after loan payments. In 2026, typical gross yields of 3-4% often fall short of covering mortgage costs, leading to negative cash flow for many investors.[1][2] Homejourney helps you verify this with precise calculators and bank comparisons for safe decisions.

Why Rental Yield vs Mortgage Matters in Singapore

This cluster focuses on cash flow analysis—a critical subtopic in our pillar guide on Financing Multiple Investment Properties Singapore: Complete 2026 Guide ">Financing Multiple Investment Properties Singapore: Complete 2026 Guide. Understanding if rental income covers your mortgage is essential under Singapore's Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) rules from MAS. High property prices mean yields rarely exceed 4%, while SORA-based mortgages hover around 3.5-4%.[1][2]

At Homejourney, we prioritize trust by verifying data from URA and HDB sources. Use our bank rates page to compare DBS, OCBC, UOB rates instantly, ensuring transparent multiple property financing.

Key Concepts: Rental Yield Explained

Rental yield is annual rental income divided by property value, expressed as a percentage. Gross yield ignores expenses; net yield deducts maintenance, agent fees, and vacancies. In Singapore, URA data shows 2026 gross yields at 3-4% for condos in areas like Tanjong Pagar or Orchard.[1][2]

For example, a $1.5M condo renting at $5,000/month yields gross: ($5,000 x 12) / $1.5M = 4%. But after 10% vacancy, $2,000/year maintenance, and property tax, net yield drops to ~2.5%.[3] Homejourney's tools help model this accurately.

Mortgage Costs and Singapore Regulations

Bank loans dominate for investors, with Loan-to-Value (LTV) up to 75% for second properties under ABSD rules. HDB loans cap at 2.6% fixed but limit investor access. Most use SORA-pegged loans from DBS or OCBC at 3M SORA + 0.7% (around 3.8% in 2026).

TDSR limits debt payments to 55% of income; MSR to 30% for HDB. For multiple property financing or portfolio financing, banks assess stress-tested rates at SORA + 3.5%.[3] Check eligibility on Homejourney's mortgage calculator.

SORA (Singapore Overnight Rate Average) is the key benchmark. The chart below shows recent interest rate trends in Singapore:

As seen, 6M SORA fluctuated around 3.2-3.8% in late 2025, impacting cash flow. Track live rates via Homejourney for several properties loan planning.

Cash Flow Analysis: Step-by-Step Framework

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

Calculate gross rental income: Use URA median rents—e.g., 2-bed condo in Jurong East: $4,200/month.[1]
Deduct expenses: Agent fee (1 month/year), maintenance ($2,000/year), vacancy (5-10%), property tax (12% of annual value).
Estimate mortgage: For $1.125M loan (75% LTV on $1.5M), 25-year tenure at 3.8%: ~$6,200/month via Homejourney calculator.
Net cash flow: Rent $4,200 - expenses $800 - mortgage $6,200 = -$2,800/month negative.
Adjust for IO loans: Interest-only from UOB reduces to $3,560/month, yielding +$400 positive flow. See our Best Bank Loans for Property Investors: Interest-Only & IO Loans Explained ">IO Loans guide.

This framework debunks the 'tenant pays mortgage' myth—real net yields post-mortgage are often 1-2%.[3] For property empire financing, scale with Homejourney's multi-bank applications.

Real Singapore Examples: Positive vs Negative Cash Flow

Example 1: Tanjong Pagar 1-bed Condo ($900K, rent $3,800/month). Gross yield 5.1%.[1] Mortgage $5,100/month (3.8%, 75% LTV). Net flow: -$1,500/month. Insider tip: Corporate leases here boost rents 10-15% via expat demand.

Example 2: Jurong Lake District ($1.2M, rent $4,500/month). With IO loan from HSBC ($3,800 interest), net +$600/month after expenses. Yields improve near MRT (5-min walk Exit A). Data from URA confirms 3.7% average.[1]

For upgraders or investors, refinance via Homejourney: Submit once via Singpass to DBS, OCBC, UOB, HSBC—compare offers safely.

Optimizing for Multiple Properties and Portfolios

Portfolio financing limits LTV to 45-60% per additional property under MAS rules. Use interest-only loans for cash flow—Maybank offers up to 10 years IO for investors. Combine with high-yield areas like Geylang (4.2% gross).[1]

Actionable tip: Stress-test at 6% rates. Homejourney verifies CPF usage (up to Ordinary Account for downpayments) and links to LTV & ABSD Guide for Singapore Investment Properties | Homejourney ">LTV & ABSD Guide. Search budget-fit properties on Homejourney property search.

Disclaimer: This is educational; consult Homejourney Mortgage Brokers or financial advisors. Rates fluctuate—verify on our bank rates page.

FAQ: Rental Yield vs Mortgage Cash Flow

1. Is 4% rental yield enough to cover mortgage in 2026?
No, typical 3.8% SORA mortgages exceed net yields of 2-3% after expenses, creating negative cash flow.[3] Use IO loans for breakeven.

2. How does TDSR affect my property empire financing?
TDSR caps total debt at 55% income; multi-property loans stress-test higher. Calculate on Homejourney.

3. Best banks for investor mortgages?
DBS, OCBC, UOB offer competitive SORA +0.6-0.8%. Compare all via Homejourney's one-click multi-bank submission.

4. Can HDB owners invest with positive cash flow?
Rarely—MSR limits. Bank loans for condos work better; check eligibility instantly with Singpass on Homejourney.

5. How to improve cash flow analysis accuracy?
Factor 10% vacancy, taxes. Use Homejourney's real-time SORA tracker and calculator for precise modeling.

Master Rental Yield vs Mortgage: Cash Flow Analysis with Homejourney—your trusted partner for safe, verified property decisions. Start with our bank rates today and build confidently. For full portfolio strategies, read the pillar: Financing Multiple Investment Properties Singapore: Complete 2026 Guide ">Financing Multiple Investment Properties Guide.