Financing strategy using existing real estate as collateral

Hello dear forum community,

First of all, thank you for all the worthwhile contributions here. Now I also dare to address the assembly with a concern.
In advance: I am aware that the presented issue is a luxury problem. I simply hope to receive further perspectives here in the forum. I ask for factual contributions.

Current situation:

[*]House I: current market value approx. 580,000 euros, fully paid off, ownership of my parents
[*]House II (investment property): market value approx. 750,000 euros, outstanding loan of 305,000 euros, full repayment by 2040, sale to avoid speculation tax not before 2025, if possible; rental income 1,850 euros net cold rent, so the investment pays for itself
[*]Apartment I: current market value approx. 850,000 euros, fully paid off

We live in the described condominium and want to enlarge our living space.
House I will pass into my ownership (inheritance) in the next 20 years.
Our income situation is as follows: as a couple (35 and 27), we have 8,000 euros net income. Overtime, profit-sharing and possible increases are not included. With this, we can afford a rate of 3,500 euros/month.
Equity of 150,000 euros is available.

To fulfill the wish to enlarge our home, unfortunately, we need a lot of money. Here in the large cities in the southeast of the country, real estate is not cheap.
All properties we like are priced between 1,000,000 and 1,200,000 euros. A lot of money.

Now, of course, it would be no problem to sell our apartment and thus finance something bigger. The same applies to the investment property. House I (parental home) will only be available after the death of my parents and should not be mortgaged or sold until then.
But I am especially attached to the apartment and clearly prefer renting it out (estimated income 1,700 euros net cold rent). That would accordingly increase the monthly affordable rate. (max. 4,500 euros/month)
Of course, I would like to keep all properties (Apartment I and House II) and only realize them later since the investment property currently pays for itself.
Here are my questions:

[*]What pitfalls do you see in a 100% financing here? (Incidental costs can be covered by the equity)
[*]Since my parents’ house (House I) will be available for disposal in 15-20 years, I prefer financing with an equivalent residual debt after 20 years. Are you aware of such financing options that specialize in a residual debt without follow-up financing?
[*]What is your experience with additional securities? Do lending institutions accept second rank in the land register? This would be the case when securing with the help of the investment property.
[*]Do you see possibilities for 100% financing without additional security at all?

I know it is a complicated case. I ask neither to judge me nor my concern; these are values that my father and I have earned through work.
The current economic situation in the world does its part, so that our expansion will certainly take place first in 2021, when interest rates and real estate prices have adjusted to the new environment, but the questions are still on my mind.

Thank you very much for your answers!

But I am especially attached to the apartment and I clearly prefer renting it out here (estimated income 1700 euros net cold rent).

With an apartment value of €850,000 and a cold rent of €1700, that corresponds to over 41 years’ rent.
That is bad. Significantly increase the rent or sell. If a higher rent cannot be enforced, there is a probability that you are overestimating the market value.

What pitfalls do you see here with a 100% financing? (Incidental costs can be covered by equity)

Your fundamental problem is the ratio of desired debt capital to a €3500 monthly payment. That is too low.

Since my parental home (House I) will be available for liquidation in 15-20 years, I prefer financing with an equivalent residual debt after 20 years. Are you aware of such financing options that specialize in a residual debt without follow-up financing?

That is a completely normal annuity loan. Nothing special.
When the fixed interest period ends, you are free to pay the remaining amount in cash.

What is your experience with additional securities? Do credit institutions accept second rank in the land register? This would be the case if secured with the help of the capital investment.

Second rank is useless.

Apartment 1 is the solution here. Either you sell it, which solves both the question of 100% financing and the problem of the too low desired payment. Or you keep the apartment, rent it out, and use it as collateral (or use it to raise capital).

Do you even see possibilities for 100% financing without additional securities?

Yes, why not. But not €1.2 million with €3500 per month.

The income of 8k should be enough for 1.2 million since rental income from [Wohnung I] will probably also come in if you rent it out. The apartment can also serve as additional security to reduce the interest rate for the house.

However, I would reconsider renting out. Why?

The rental income would not be offset by any interest, resulting in full taxation. The new loan would have nothing to do with the apartment and, in my opinion, would not be deductible with the tax office.

If you temporarily mortgage the apartment and then sell it anyway, you would probably have to pay penalties on the loans because the additional security is missing.