Advice: Keep 2BR unit and buy interstate investment, or sell unit and buy house in close-by suburb that we don’t love but is affordable. Baby on way.

Hello and apologies if this is NOT the place to seek such advice.

My husband and I (33) are expecting our first child. Both earn 150k, so is currently a 300K household.

We currently live in our 2BR unit in South Sydney which we bought in 2022 for $815K. Currently owing $740K. We have 80K in savings/offset account. No other investments.

We are torn between 2 options here and would love advice on both from this more experienced and no doubt knowledgeable, community.

We have been told by our broker that we could be approved up to another 1.2mil (before having this baby).

Option 1: stay living in unit for ~5 years and purchase investment property interstate to a max of 650K. If we outgrow this unit in that 5 years (which I’m sure is inevitable) we would need to rent this out and then rent a larger place locally.

Option 2: sell current unit and purchase house nearby but NOT in a suburb that we want to live in or really particularly like (but is close to the places we frequent, suburbs and beaches we like and close to work)

We are really stuck on which path to take as we would hope in 5 years out unit and investment could build equity so that we would have a better chance of buying a house in a suburb we love.

Obviously we were hoping to action either plan this year, before baby comes.

Thank you in advance for any and all advice!