sell & pay off new mortgage or rent ?

Hi,

I probably know the answer to this one but for some reason I seem to have the belief that the opposite view may have some merit although I haven’t seemed to find much to back that up!

Basically myself and my girlfriend both own houses in perth, mine has smallish mortgage (60k) outstanding and my girlfriends has approx 130k. Given the expected rents in the areas both these properties will give a positive cashflow. We have just purchased another property for us both to live in and taken out a fairly large mortgage. A lot of advice seems to be that we should sell either one or both of the houses thus allowing us to pay off a lot of the new house mortgage and if so inclined take out an investment property and negative gear that.

However I quite like the idea of keeping hold of any properties we have and paying off the higher mortgage (even though it is a considerable higher amount of debt that we currently have) if that is possible in our financial situation (which it is just now and with the booming economy in resources in perth I am of the belief that I should have pretty good income and perhaps reasonable capital growth for the next five years or so). It doesn’t sit very well with me the principle of paying 52c of the loss on a negative geared property (if I understand that correctly) and also paying agents fees and additional stamp duty , but I also recognise that I would be foolish not to utilise the tax laws on property etc to my best advantage.

So trying to come up with a question out of all that !!

is it really that much of a no-brainer ? ie sell , pay off non-deductible loan as much as possible then borrow for new investment ? or would there be any merit in keeping all three and paying off the bigger mortgage.

Thanks

ken