What you're proposing appears possible asuming your income qualifies you for €320,000.
Interest-only is also possible. Whether or not it's wise is a different question. If you go interest-only, you're enjoying lower repayments now but you'll owe more when you eventually sell the house. So you're enjoying some of the benefits now but they come at a cost.
If you go annuity mortgage now, you can still tidy up your finances as you propose, but when you eventually sell the house, you'll have paid off some of the loan and will therefore have a bigger deposit towards your next place.
You say your repayment is currently around €1,250. Is that including or excluding the car loan repayments, which you're taking out? Why don't you look at an annuity mortgage with repayments of (€1,250 + current car loan repayments)?