Q.

We have an $80k extra repayment to our current house loan. We are planning to buy a house worth $430k using the equity and drawing down the extra repayment.

Currently our mortgage balance is $137k and the value of our house is $320k. We bought the house for $250k. Is it advisable to use the equity of $70,000 plus the $80,000 extra repayment to buy a new house as our main residence?

We are planning to rent out the other one and if we take out the extra repayment the mortgage will be $217,000 - is this a good price range for a good investment and still claim negative gearing?

If I go ahead with this scenario - rent out the current house and move to new house - is it better to pay interest only for my investment property?

The problem with keeping the existing house and renting it is that you will be liable for capital gains tax on any increasing value from the date you move out and your tax deduction will be limited to the interest on $137,000 loan.

Unless you forsee very good capital gain you may be better off to sell it now, free of capital gains tax, and then rebuy another investment property in the future.