How much loan can we take?

At an assumed interest rate of 2.5% and a term of 25 years with a sum of 300,000 euros, you would have to pay a monthly rate of 1,345 euros. Under the same conditions, you would need an annuity of 1,800 euros for 400,000 euros.

Now you can decide what suits you.

At an assumed interest rate of 2.5% ....

Whereas with the equity and possibly secured income and with a certain level of reputation (house bank, positive consumption behavior, etc.) one can certainly currently expect an interest rate of ~1.8%. In addition, the repayment can be adjusted accordingly, playing with special payments (condominium is being considered), so that you can also manage with a monthly burden of < 1,500 euros and, if necessary, pay off a 400K loan in 25 years.

The amount actually seems totally crazy to us ;) Everything just has to fit perfectly for you to actually be through before retirement.

The amount actually seems totally crazy to us ;)

Yes, that's true. The initial years are critical; you have to grit your teeth and practice discipline. Assuming everything goes well (no illness, death, termination, accident, divorce, etc.), time will work in your favor.

In 10 years, you will easily be able to manage the installments through salary increases and inflation and on top of that make substantial extra payments. ;)