A lot is being mixed up again.
You have financed 100% and your retirement is still 32 years away. What happens in those 32 years, the bank can hardly estimate, hence this guideline. But you also say that you must be "almost through" with the loan. If 50,000 EUR remain, that won't be a drama.
If you want to refinance at 60, then your future pension is almost set in stone. Then the bank can recalculate and will certainly give you a loan for 150,000 EUR. Because your house will be worth much more, that counts for the bank. The bank wants its 150,000 EUR plus interest back. If this amount is more than covered by the house, then the banker jumps for joy. That is much preferred by them than financing a new build where they finance 70, 80% of the total amount.
And with the 75-year-old who renovates his little house. The problem is that the unrenovated little house only has a very low market value. Nobody simply buys it anymore for a reasonable price. The security is therefore relatively small, but the amount for renovation is high... and, someone unfortunately has to say this: The risk that the 75-year-old dies during the renovation is real. The life expectancy of men in Germany is 78.5 years.
Sorry, you seem to be confusing me. I still have 18 years until retirement. And since we are civil servants or in the public service, the pension is relatively fixed even now or the bank can estimate it. And I am not the type to be in debt, so I want to be done with my liabilities by then.
There are actually cases where homeowners over 70 get no loans from reputable banks for renovation measures due to this EU regulation/guideline/recommendation. Even though the house is worth almost a million. I read about one such case in the reputable press some time ago. By the way, that was the lady’s longtime house bank and her house was in or near Munich. But whatever. Maybe that is just an extreme isolated case.