Rental Yield vs Mortgage: Cash Flow Analysis for Singapore Investors | Homejourney

Rental yield vs mortgage cash flow analysis reveals whether Singapore investment properties generate positive cash flow after financing costs. In 2026, typical gross yields of 3-4% often fall short of mortgage payments, leading to negative cash flow for many investors.[1][2] Homejourney helps you verify these numbers safely using our trusted calculators and bank rates comparison.

This cluster article dives into tactical cash flow analysis for property investment financing and buy to let mortgages, building on our pillar guide Property Investment Financing: Complete Singapore Guide | Homejourney Property Investment Financing: Complete Singapore Guide | Homejourney . You'll get actionable steps to assess rental property financing viability amid TDSR, MSR, and ABSD rules.

What is Rental Yield vs Mortgage Cash Flow?

Rental yield measures annual rent as a percentage of property value: (Annual Rent / Property Price) x 100. Gross yields in Singapore average 3-4% for premium markets, per 2026 data, lower than Asian peers at 4-6%.[1][2] Net yield subtracts expenses like maintenance, agent fees (typically 1 month's rent), and property tax.

Mortgage cash flow compares rental income against loan payments, including interest, principal, and opportunity costs on down payments. Under MAS TDSR (60% debt cap) and MSR (30% for HDB), many investment property loans show negative monthly cash flow initially.[3] Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator lets you test scenarios instantly.

Singapore Rental Yields in 2026: Real Data

Singapore's land scarcity drives high prices, compressing yields to 3-4% gross.[1][2] For a $1.5M condo in Tanjong Pagar (e.g., 700 sq ft, 2-bed), median rent is $5,500/month or $66,000/year, yielding 4.4% gross (URA data).[1] After 10-15% expenses ($6,600-$9,900), net yield drops to 3.7-3.9%.

Compare to HDB in non-mature estates like Punggol: $600K 4-room flat rents at $3,200/month ($38,400/year), gross yield 6.4%, but investor restrictions apply (min 3-year occupation for resale).[1] Corporate demand from tech firms boosts rents 10-15% above market in areas like One-North.[3]

Insider tip: Check URA's real-time rental index for districts; yields vary: 5%+ in Woodlands vs 2.5% in Orchard Road prime.

Mortgage Costs for Investment Properties

Bank loans for investor mortgages offer 75% LTV (25% down payment) for second properties, per MAS 2026 rules (see LTV & ABSD for Singapore Investment Properties: 2026 Guide | Homejourney LTV & ABSD for Singapore Investment Properties: 2026 Guide | Homejourney ). Add 17% ABSD for citizens buying third+ property.

Current 3M SORA ~3.0% + 0.7% spread = 3.7% effective rate (DBS, OCBC, UOB).[3] For $1.125M loan ($1.5M property, 25% down), 25-year tenure: monthly payment ~$5,800 (principal + interest).

HDB loans at 2.6% fixed (90% LTV for first-timer, but limited for investors) are cheaper but capped. Compare live rates from DBS, OCBC, UOB, HSBC, Standard Chartered at https://www.homejourney.sg/bank-rates.

SORA (Singapore Overnight Rate Average) is the key benchmark since 2024. The chart below shows recent interest rate trends in Singapore:

As shown, SORA peaked at 3.2% in Q4 2025 but stabilized, impacting rental property financing affordability.

Cash Flow Calculation: Step-by-Step Framework

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

Estimate gross rent: Use URA stats or Homejourney's property search at https://www.homejourney.sg/search for comps (e.g., $5,500/month Tanjong Pagar condo).
Subtract expenses (20-30%): Agent fee ($5,500), maintenance ($300/month), tax (12% on rent), vacancy (5%). Net: $4,290/month.
Calculate mortgage: Use Homejourney calculator for your income under TDSR. Example: $5,800/month payment.
Cash flow: Net rent - mortgage = -$1,510/month (negative).
ROI adjustment: Add principal paydown (~$400/month equity) + appreciation (2-3%/year). True return: 1-2% cash-on-cash.[3]

Example 1 (Loss): $1.5M condo, $66K rent, $69.6K mortgage = -$3,600/year cash flow. Down payment opportunity cost at 3% fixed deposit: extra -$9,375. Total loss: $12,975/year.

Example 2 (Break-even): $600K Punggol HDB, $38.4K rent, $28K mortgage (HDB loan) = +$10,400/year. But ABSD/TDSR limits scalability.

Optimizing Cash Flow for Positive Returns

Choose interest-only loans from banks like HSBC or Maybank (up to 3 years, ~3.5% rate) for buy to let mortgage strategies (details in Best Bank Loans for Property Investors in Singapore 2026 | Homejourney Best Bank Loans for Property Investors in Singapore 2026 | Homejourney ).

Target 5%+ gross yields: Non-central ECs or older condos in Jurong East.
Minimize down payment via refinancing existing assets.
Use CPF for down payment (up to 55 years old), but factor OA interest 2.5%.
Multi-property: See Financing Multiple Investment Properties: Homejourney 2026 Guide Financing Multiple Investment Properties: Homejourney 2026 Guide .

Homejourney prioritizes your safety: Apply via Singpass at https://www.homejourney.sg/bank-rates for multi-bank offers from DBS to Citibank, verified instantly. Our brokers provide free, transparent advice.

FAQ: Rental Yield vs Mortgage Cash Flow

Q: Is 4% rental yield enough for positive cash flow in 2026?
A: Rarely. After 3.5-4% mortgages and expenses, most show negative $500-1,500/month. Aim for 5.5%+ gross.[3]

Q: HDB vs Private for investor mortgage cash flow?
A: HDB offers better yields (5-6%) and lower rates but resale curbs. Private suits scalability despite lower yields.

Q: How does TDSR affect buy-to-let analysis?
A: Caps total debt at 60% income; e.g., $10K household income limits new loan to ~$3,600/month after existing debts.

Q: Can I use interest-only for rental property financing?
A: Yes, from UOB, Standard Chartered (2-3 years). Ideal for bridging to sale/refinance.

Q: When to consult Homejourney Mortgage Brokers?
A: For personalized TDSR simulations or multi-bank applications. Disclaimer: Not financial advice; consult professionals.

Master your Rental Yield vs Mortgage: Cash Flow Analysis with Homejourney's safe, verified tools. Start comparing investment property loan rates today at https://www.homejourney.sg/bank-rates and explore properties at https://www.homejourney.sg/search. For full strategies, read our pillar: Property Investment Financing: Complete Singapore Guide | Homejourney Property Investment Financing: Complete Singapore Guide | Homejourney .