Financing a relatively expensive dream house - would you dare?

If insolvency is a thought that subtly accompanies your life and not just a rather theoretical consideration, then better do not buy a house.

there are apparently a number of interested parties

They first have to manage that as well, and in the financial area the air quickly gets very thin, so have courage to accept gaps and don't let yourself be pressured. Strength lies in calmness!

In the end, every installment is also an investment. Conversely - if for reasons of illness, economic upheavals, or other misfortunes you are no longer able, then the house will be sold again. That is unpleasant - but a manageable personal risk, since you will not necessarily remain unrealistically indebted until the end of your days. Especially given the developments in the real estate market. Since with the GmbH in the worst case only the shareholders' assets are at risk - so what. Do it!

I would stay in the comfort zone. That's what it's for. Everything else makes you uncomfortable.

Commercially, it's clear that it should be possible as long as your worst-case scenarios do not occur.

You approached the matter rationally and said a house up to 700k is reasonable and affordable.
Now you have found your dream house and suddenly you are willing to spend 400k more for your emotion.

It must be a conscious decision for consumption and emotion.

What surprises me, but has nothing to do with the fact that you cannot afford the house, is that you do not mention any pension insurance contributions or any protective insurances such as disability insurance, etc.

1.0% for a 10-year fixed interest period I also do not find very great. We get a rate of 1.05% for 20 years with less than 80% financing including 5% special repayment and two free changes of the repayment rate.