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Pretty sure the insurer will though. I don't have RAMS - do they have DUA?

Re - credit scoring, it's hard to say. They tend to be a bit of a black box and can change without notice. I tend to err on the cautious side where at all possible, esp at super high LVR's. Are your current properties cross collateralised? If they are, you might not get your $80k from the...

BW is the only lender that will consider Option 1 - maybe BoQ but can't remember of the top of my head if they'll do it for land only. Your options are severely limited doing it this way. Credit scoring will be very harsh too - Option 2 had higher chance of success.