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Incorrect. Deductability depends on usage, not security. Using the same example. PPOR worth 400k. Existing 200k loan (not deductible). Take a second loan on the PPOR for 120k. If used for IP deposits, interest on the 120k is deductible. Either the author is wrong, or you misunderstood.

Increase the loan on an existing property. Use that as the deposit. e.g. you have a property worth $400k, you owe $200k. You increase the loan to $320k. You now have $120k to use as deposits.