You're in a very good financial position with excellent pensions and mortgage free to boot. Well done and at what is quite a young age so impressive !
I would fund the extension with €120K from your investment fund and say €80K from your cash savings. No point in borrowing or taking out a mortage when you have cash earning little to no interest and an investment fund where gains are subject to 41% tax. I'd also clear the car loan with €20K from your investment fund as no point in paying interest at close to 10% when your investment fund is probably returning <3% pa after tax.