withdrawn IP equity to pay down PPR loan. is this legal or tax invasion?

hi there , gurus

I hope you can help with this. I thought i had come up with a genius idea but only was told by my banker today that it was tax invasion?!
anyways, My strategy was below:

step 1: revalue my IP and borrow against 80% of the current market value .
for example: IP valued at 500k , and my existing loan was 200k , then I have 500k X 0.8 – 200k = 200k LOC available
now instead of apply for a standard LOC, I requested to increase the invesmtent loan amount from 200k to 400k.
then I will have 200k in the form of cash as a result of my IP loan now is increased to 400k and fully paying interest from the day it was drawn down.
step 2 : dump the 200k cash into my PPR loan. and I just recycle 200k non tax dedutable debt from my PPR into a tax deductable debt.

my banker argues that it’s the purpose of the loan that determines the tax deductablity. I said yes i dont dispute on that. but I view the 200k I am dumping into PPR a Cash rather than a Loan , it is a equity/Cash component that I earned from the IP by pumping up my investment loan ( to 400k ) against a income producing asset ( the IP itself). he said that is not how it works and I simply can not do this type of recycle. Was he right ?

thanks.