What Glenglen is talking about is exactly the dilemma I found myself in when we went to build a new house but wanted to keep our current one. You can not use an increased loan against your current principal place of residence to turn it into an investment property. Therefore by using an interest only loan with an offset you can still use the full loan value eventually for an investment loan. If the value of your house goes up significantly over time however you still don't get that much of a benefit.
Because I did not do that I ended up buying half of my house from my wife. Supposedly this is all fine and you get to use the new loan as a tax deduction, this also meant that there were no stamp duty implications.