ok guys another one for you

Hi Nath

Welcome to the forum and I hope you enjoy your time with us.

To be honest you could do both it is just a matter of how you structure it to maximise both your returns and legal Tax deductions.

Without knowing more about your current financial position it is difficult to comment on specifics but it essence i would suggest you looked at the following:

1) Initially place the 70K in an offset account linked to your PPOR giving you interest savings on the non deductible debt whilst you are deciding which way to go.
2) Based on the fact that it is unlikely your PPOR will ever become a rental property in the forseable future look to pay down 70K off the principal balance.
3) Take out a new loan (Do not use a redraw loan) secured against the PPOR  for the 70K plus whatever extra amount is required to bring this loan upto 20% of the potential new purchase price plus sufficient to cover your acqusition costs.

Assume new purchase price = $300,000 then 20% would $60,000 and if acqusition costs only came to $10,000 then a sub loan of $70,000 would be sufficient.

4) Take out a separate loan with a new lender for 80% of the new purchase price of the investment property.
5) Look to revalue the IP security is say 12 months and draw this loan back upto 80% of the increased value.
6) Use the additional amount drawn to pay down the 20% secured aganst your PPOR.

Repeat until retirement.

As i say i would need exact numbers and further details to provide you with some information but in essence the theory is the same.

Hope this helps. Drop us a line if you need further information.

Cheers

Yours in Finance