Buying a house from the father - how to best finance it?

So the house is worth significantly more than 200k plus purchase ancillary costs, unless there is massive renovation backlog.
Get an offer made. Also please ask other banks or hire an advisor/intermediary. But check if it is realistically affordable. Everything that needs to be done MUST be paid by you. No landlord takes care of it.
You need to be aware of that.

You are now paying 500,- rent. You will achieve 600,- rent. So a 1000,- annuity should be doable. 200,000 would be 200 months. Without interest. With interest maybe 240 months. Or 20 years. Then the fish is cleaned and it’s yours. So, if you are young, it’s doable. Possibly also calculate with Riester.

on 200,000€ and includes the costs incurred for the notary, land register entry, etc.

How much exactly did your father contribute?

As costs for renovation, purchasing a new kitchen, etc., we have estimated about 20,000€.

One must differentiate between value-increasing measures and such things that the bank basically does not "co-finance" or consider in the loan-to-value ratio (like the kitchen).

My grandfather wants to support us with up to 35,000€.

Does he want to be entered in the land register? Or does he only want a "contract" for the money?

because part of the nearly 1700 sqm plot is farmland. I learned from one of the local urban planners that in about 4-5 years, planning for a new development area behind our house is supposed to begin...

Then maybe there will be money in your pocket in 10 years; but maybe also in 15. Urban planning is a lengthy process. Is the farmland already part of the land use plan as building land? Or does that still have to happen?

Also, full amortization loans are (AFAIK?) somewhat more expensive than normal loans. But of course, your risk tolerance or need for security must be taken into account here.

Full amortization loans are usually cheaper if for the same comparable fixed interest period. So a full amortization loan for 20 years is cheaper than a loan with a repayment rate for 20 years. However, a 20-year or longer fixed period is always more expensive than a 10-year condition. Also, the market over 15 years is thinner.

BUY!

I would take it. If you would provide more data, the value could of course be better estimated. However, hidden depreciation can only be determined with an expert.

We have taken out a loan with Volksbank with a 30-year fixed interest rate. Volksbanken finance up to 10-year loans from their own funds; anything beyond that they finance externally themselves, as already mentioned, often as in our case through the MHB (Münchner Hypothekenbank). However, the Volksbank is listed in the land register.

In your situation, there is basically only the option to buy the house. With the rent and your tenant savings, the house can be financed without restrictions. Your equity ratio is also great due to the higher value of the property, and you should also get a great interest rate. You certainly won’t find a cheaper and better way to acquire a property.