Thanks for your comments. To respond:

I have been to banks to see how much they will lend and that I can comfortably afford. This is how I have come up with these figures. If I don't use the 300K as deposit I will not be able to borrow enough as we do not earn a lot at the moment.

I was under the impression that I would be able to borrow against the equity in the house to purchase an IP at a later date, thereby gaining tax deuctible debt at that time when I am in a better position to service it?

I will seek some legal advice, thanks Terryw. I have already sought tax advice, so I was under the impression that as long as you live in a property for 6 months every six years you can claim that property as your PPOR and that it would therefore be CGT exempt if you were to sell it in that time?

The main question that I was concerned about was if you guys thought it was likely that the banks would lend to me on the basis of being on paid leave (I haven't discussed that with them yet) and then renting the property out after the six months? And if they would give an interest only loan for a property that is initially a PPOR?

Thanks for your help

M