Use debt-free property as collateral for a second house?

Hello everyone,
my husband and I would like to build a second house, but this time suitable for our age. Our first house is paid off. We plan to rent out our first house because there is an extreme shortage of apartments here in Wolfsburg. Can we present this house as collateral to the bank and what about the equity? Do we still need 30% or is a little less sufficient? Because we would use half of the rent to pay off the loan and save the other half in case repairs are needed. Thank you very much in advance for your opinions.

Let's see how long there will still be demand for apartments in Wolfsburg... but whatever.

Of course that is possible and helps to get significantly better conditions than with 100/110% financing without equity.

Whether it makes sense depends on many other factors and it has clear advantages but also disadvantages.