House Purchase/Financing - Which Strategy

Hello
One of my questions as a preliminary info - maybe you have a tip/ideas.
We have a debt-free house that unfortunately is in the wrong location and have a new property in mind. This is an older house that still needs to be renovated.
In my opinion, there are now two possibilities.
Sell the current house (which I would find hard to do for sentimental reasons and would preferably not want to) and purchase the new one.
Or rent out the current house and pay off the new one with it.
The problem here, however, is that no interest is incurred for the rented house - I then pay it on the owner-occupied one. Probably rather unfavorable tax-wise.
Do you think a bank would register the land charge for the loan amount on the debt-free house?
What is the best way to proceed?
Thank you very much for your advice/suggestions

Musketier is right. Although the bank can use the paid property as collateral, which may be compatible with the possible regional principle of the bank (it may be that banks only accept properties in their respective business area as collateral). But this would not necessarily lead to a tax reduction – precisely because of this direct connection. Now I am a financier and not a tax advisor, so please consult a tax advisor.

BUT .. if the bank can also use the old house as collateral, the terms will be better, since the loan-to-value ratio is better.

It might also be worth considering that a rented house is not a condominium. So the presence of the owner might occasionally, or in the case of an older property even more frequently, be required. Or at least that of an authorized representative.
Furthermore: If you have a passion for the property, do you really want to rent it out to "strangers"?

Later renovations, refurbishments, and maintenance expenses for THIS property can also be tax-deductible.