When I got pregnant with my DS, I was with NAB - they suck!!! We refinance with St George and they were fantastic.
Can you get a valuation on both properties to see what the equity is in them, then you might be able to roll them into the one mortgage (which might work out cheeper than paying two), they maybe give the banks a call.
It is strange that the bank has said that you can not rent out your house tis your house as long as you make the repayments what business is it of theirs.
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