yep. I think IO for all loans is the way to go. You can always pay extra if you want to, but have the flexibility not to.

A LOC is a separate loan – but be aware it has a higher interest rate. You may be able to get away with a standard loan, IO.

if you split you can also have the investment loan IO and the home loan PI. This will not be possible with a combined loan – and you wouldn't want to pay down an investment loan while you have a home loan outstanding or you would be losing tax avings

What you would be doing if you did this is borrow $110,000 extra to pay down the home loan. If you did this the interest wouldn;t be deductible.

You should look at setting up a LOC on the IP and borrowing money to pay expenses and interest on this and use your freed up money to pay down the PPOR loan – seek advice from an accountant or tax lawyer first.

Your loan was paid down to $75,000. When you rent it out the interest on this should be deductible.
You withdrew $150,000 – the interest on this won't be deductibe. (there is no interest while it is sitting in the offset, but when you take it out the interest will only be deductible if it is used for investment or business.)

Don't forget land tax is only on the land value too. I am not sure how the OSR treats absences from main residences for land tax purposes, but it will be different to the ATO.

I think it is a good idea to live in a place initially as you will have the option of claiming it as your main residence. Sometimes your intentions change, or you may suddenly need some money etc and have to sell so best to plan ahead just in case.

Can you back up this claim? I have never heard of anything like this.

Why assume that? It is usual these days for a full inspection. Some lenders won't inspect if the LVR is low, but policies change constantly and you wouldn't want to find you can get finance but can't get an increase or, if you want to sell, the buyer can't find finance.

I would be getting a building inspection at least, and maybe an engineers report depending on how bad it is.

things like this can hurt finance too. I had a client with a house with large cracks and the lender wanted an engineers report which cost him around $1000 – and then they declined it anyway. i think he did some wall papering after that

I agree with damit

you want to pay back non-deductible debt first before paying off any investment debt. So change the IP loan to IO asap. This will reduce the repayments which you can then use to pay off the PPOR loan.

Instead of using any cash for another IP what you should do is to pay down the PPOR loan and then reborrow it for an IP. (preferably set up a LOC or a separate account). You will be increasing deductions this way which will release cash to pay off even more of that PPOR loan.