Hi once again no one is going to make the decision for you at some point you will have to make it yourself, by using the equity in your own property you will save on the Mortgage Insurance however by maxing out the loan on the invesment property you should have a better tax advantage. 

Why not spin it past your accountant the LMI may be deductable anyway in some form or other

The privacy act would make sure of that

I would suggest you speak to your accountant, however a little room for thought are your properties on interest only? this would also increase your cash flow.  It is not sure if you are living in property 1 or if you have moved out if you have moved out you would need to move back in for a period to prevent the CGT but again speak to your accountant or even ring the Tax office you do not have to give a name. 

On a personal level I think selling a property for personal debt is a bit drastic when you seem to have a reasonable income, why not  set yourself a budget and pay the debt off? I have a couple of Xcel spead sheets set up as calculators if you would like them email me and I will send them to you.  Or you can sell if you feel that is the better option

Have you made it interest only? this will help a little, you can get a reduction in your weekly tax however discuss this with your accountant first.

That would be a honey moon period and then go onto a higher rate than a standard discount rate at the finish; often only last 6mths to 1 year ,  you need to take the whole loan into perspective.  Also they may have no discharge fee but have it disguised under a different name.  eg defered establishment fees DEF

Interesting comments

Usually you can use 70% of the rental income, if you would like a free assessment you can contact me

Some choose to save on the initial lower rate to save a few dollars and not looking to the longer term saving when using features of the loan to their advantage. 

Yes the success stories are always an inspiration good on you

Graham at Platinum accounting is very good I believe they also have a financial advising attachment but not sure on that

From Platinum Accounting
[email protected] is his email