How to proceed / decide regarding financing?

Hello

this is my first post and I would like to hear your opinion/suggestion.
The situation is like this:
47,43 years old, married, 2 children 12/10, both working 50%, net about 3000 + child benefit + 2700 cold rent/income (inherited house), existing land and equity about 1.1 million. Expenses currently about 1500 and we want to build soon and leave the big city and move to the countryside. Our house will cost about 850 thousand including everything and the land is available. Our house bank would very much like to have a conversation with us and will probably offer us something. My wife and I are still considering which direction we should go and we have thought about the 2 options.

1. pay everything in cash and thus be debt-free and spread the remaining capital into stocks and funds or

2. partly equity and partly finance and the rest in stocks etc.

For option 2 the question arises: how much equity/financing makes sense and for how long.
How would you proceed, what would be your approach in this situation.

Many thanks and best regards

In Germany, there are so many tax advisors that there is surely one who understands your native language, so that any comprehension problems with the complicated subject matter are eliminated. With over 1 million capital, I would never ever go to opinions of private individuals in a forum.

Well, you basically have to see that you could pay it from equity. So now you could calculate which returns you achieve with this equity or the share that might be invested in the house and what the loan costs you. That depends crucially on how the money is invested. With about €6000 in income and only €1500, with everything really included, you have €4500 left. You can easily cover a loan payment in the higher category with that.

But as 11ant says, you should have a tax advisor calculate that for you or make your own calculations. So how much the equity invested each time generates and what the potentially higher loan costs you. The bank will tell you at what equity ratio you get the best interest rate, I have 80% loan and 20% equity in mind as a limit (but I am not an expert in the matter).

I can only report how it was with us. We dissolved part of the portfolio and paid off our house. The rest of the portfolio continues to grow.
(No action recommendation)

...
With over 1 million capital, I would never ever follow the opinions of private individuals in a forum.

I would do the same with significantly less than 1 million euros - so not follow opinions in a forum :)

I would probably mortgage the rented property and use the money plus equity to build my own place.

The advantage is that the loan interest can then be offset against the rental income, saving taxes.
Here, a tax advisor is actually the right contact person.

I would probably mortgage the rented property and use the money plus equity to build my own house.

The advantage is that the loan interest can then be offset against the rental income, thereby saving taxes.
Here, a tax advisor is indeed the right contact person.

That is 100% wrong. If you want to claim interest tax-deductible, the loan taken out must also be used for a project that generates income. You can mortgage the rented property to get a better interest rate for the private house construction, but the interest is not deductible because the money is spent on private purposes.