You’re a time waster.

The trouble with this is that deductibility depends on the names of title – in general.

It may be possible to have separate loans, by your sister guaranteeing your loan and you guaranteeing her loan, but this may not be effective for you to claim the entire interest on your loan.

So you should check with an accountant before doing anything.

The direct link doesn't seem to be working atm, try http://www.ato.gov.au/rba/disclaimer.aspx and use the ruling number to search

This could be the case, but there are many other factors that need to be considered.

In this global climate do you think rates are likely to go up or down?

I would do neither. You would want to minimise the size of your PPOR loan and maximise the investment loan to enable you to save more tax.

Richard's method makes sense.

Loan 1. A small PPOR loan by using $250,000 as deposit.
Loan 2. You then take out a LOC up to 80% of the value of this.

Loan 3 for the new property. IO as high LVR as possible with the deposit etc from loan 2. So you will end up borrowing 105% of the investment property. Loan 3 is only secured by the investment property. Loans 1 and 2 are only secured by the PPOR.

Firstly, you will also need to factor in tax deductions.

Secondly, if you are doing it with the intention of paying your home loan off sooner then the ATO probably won't allow it. see TD 2011/D8

GST is very confusing, especially with property.

This is my understanding:

Residential property is generally exempt from GST. But new property is not. New is classed as something completed in the last 5 years.

When you construct a property you will be charged GST on materials and labour. And when you sell you will have to charge the buyer GST if sold within the first 5 years (built into price). So when you do sell you can deduct all the GST you have paid and then pay the ATO the GST you have received.

If you do claim GST as you go and dont sell the house in 5 years then you would not have been entitled to claim the GST so you would have to pay it back.

And, to claim GST on the land etc you would have to had received a tax invoice at the time of the purchase and be registered for GST.

The sort of entity you use shouldn't really change things.

Make sure that the vendor will accept a deposit bond as many won't. 10% cash is standard

A registered mortgage is one that is legally documented with registration at the land titles office.

An equitable mortgage would be one that is unregistered.

Generally registered takes priority over non registered, but first in time also takes priority over later and the rules are very complex so even if you give someone else a registered mortgage now the bank may still take priority. If you didn't give them the paper work they could also call in the loan too so there is not much you could do – (unless you had no other assets and remortgaged the property with another bank and took out a LOC and run off with the money! You would then let the banks fight it out over priority. You would be committing offences though)