No longer the right structure

Three years ago I was working in the Mining industry doing shift work and night shifts and earning $3,000 per week. I have an investment property on the central coast of NSW paid off currently a rental ($380) per week.

Back in 2014 and 2015 I have purchased two more properties in Brisbane around $350,000 each and have two interest only loans and a L.O.C. with a credit limit of $240,000 and a debt of $123,000.
The loans are in my name only (Single person)

My working situation has changed dramatically now I'm living in Brisbane in one of the investment properties with $50,000 in an offset account against the property.

My current situation as follows

Inv. property 1 (paid off) renting for $380 per week
Inv. property 2 (I.O. loan) paid $350,000 in 2014 renting for $380 per week (only 7 year old house claiming depreciation tax benefits)

Now living in Inv property 3 so it has become PPOR ( loan of $350,000 I.O loan have $50,0000 in an offset a/c against it .

My income has dropped dramatically to b/w $900-$1000 per week
I have no more borrowing power for future IP's after seeing a broker
My L.O.C. is going up and up( all my weekly wage goes into it with the two lots of rents and I use my credit card to pay personal expenses and property expenses.

Mt current loan structure with the LOC is no longer working .
Pls provide some good advice what to do

 

Stop putting your wage into the LOC for starters. You are creating a tax nightmare by doing this. Deposit all income into the offset account against the property you are living in.

What was the LOC used for?

 

Can you move into the paid off I.P. ?

Apart from that, is a broker able to assist you to restructure? What would like to achieve from restructuring?

 

Not able to move into the paid off I.P as its in another state and my job is here in Brisbane. I feel the personal debt and property debt is mixed up which makes it hard to claim property expenses at tax time and the concern with the debt in the LOC but I guess the only way to get it to go down is find a higher paying job

 

get some tax advice.

You will need to split loans up which may not be possible if you cannot service. the alternative is to apportion the interest.

Who is the lender?

 

ANZ

 

I don't know the policy off the top of my head but you may be able to split loans without a reassessment.

Speak to your broker whether this is possible and then seek tax advice about what the splits should be and then go back to the broker and split the loans.

Any used portion of the LOC may also be able to be converted into an IO loan at a lower rate.

 

The LOC was used as part of the deposit for the Investment property.

 

for anything else?

 

You will need to get tax advice. This could turn out nasty from a tax point of view.

Also a good broker.

 

If you've only looked at ANZ for borrowing capacity, then you need to look elsewhere. Of the major banks, ANZ is the least generous in their borrowing capacity calculations for most investors. There are lenders that will lend substantially more (if that's what you want to do).

Get some tax advice to figure out the optimal structure, then you need to restructure the loans in line with that advice.

 

If sub 80% its done via a "non credit critical request" form which is a tick and flick with no assessment required.

As Peter said it may pay to get a second opinion from another broker.