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Savings in account, what kind of mortgage is best for 2nd home?

We have about 50k left on current house and we're looking to buy a second home as an investment / home for extended family.

Have savings as well so wondered is it better to pay off first mortgage then (when we can afford it) look to get new mortgage on 2nd property?

Or keep 1st mortgage and then use savings as deposit for 2nd home? What about an 'offset mortgage' or something like that where savings can be used against mortgage payments?

Sorry not so hot on these things hence why I'm asking.
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