Thanks Terryw, that is what I was thinking the best plan would be.

So if in two years time the property were to increase $35k (hopeful!!) and I could contribute $35k of my own into the offset, the guarantor would be released?
My plan then would be to not pay off the loan, but look at buying another property. I'm disciplined with my spending, so am confident the offset will work for me. The offset account in question isn't fully transactional, and I quizzed the lady at the bank if it were still worth keeping a high interest saver account opened, or just contribute everything to the offset? She wasn't very helpful, but at the same time, I'm not sure what I wanted to hear!!

I understand the basics of IP's, being claiming interest on tax, but feel as though I have no choice in paying down the loan amount via offset asap to release the guarantor, thus reducing my interest and possible tax gains. But I'm hoping short term loss will help provide a pathway to long term gain.