Thank you for your comments everyone!

Ok so at the moment I have equity around 60K which I still owe bank about 240K, which like you mention essentially my LVR is around 80% .. so at this stage virtually there is no equity I can pull out.

However, by next year (which is when I am planning to buy a second property), I should be able to add about 30K to my equity.
So by that time I should refinance my loan to 80% LVR, which means I have extra cash of around 30K. On top of that I will change my loan from P&I to IO for the investment property…
Is that how it works? So in addition to my 150K cash I will have further 30K cash towards buying second property.. sounds right?

Andrew, I dont really understand your comment here: (like i said im very new at this so bear with me )
"While you MAY be able to borrow some of that against your current property at 80% LVR already, why would you, when you'll only be at 70% LVR for the new house?"

And regarding your option B .. although it sounds good, thats definitely not something that I want to do at this stage.. maybe further down the road yes.