The first question you need to address is whether it is a good idea to retain your former home. I suspect that it is not a good investment and should be sold as soon as possible. As there is a mortgage shortfall of €40k, you may find it difficult to get the lender's permission to sell. So, if you do decide to sell it, you should pay down the mortgage shortfall as quickly as possible.
If you decide not to sell it...
Overpaying House 1 would save me more over the term
It is meaningless to measure anything "over the term". If you decide to keep it, you should review the decision every year anyway.
€100k on your family home costs you €3,800 a year.
€100k on your investment property costs you
Interest €3,800
Tax relief€1,400 (€3,800 x 75% @50%)
Net cost €2,400
So if you are committed to keeping it, then you should pay down your family home mortgage first.
However...
I think you should pay down the €40k negative equity on the investment property first, anyway. It will cost you an extra €560 a year, but it will give you the flexibility to sell it if you change your mind.
The worst position to be in would be to want to sell your home urgently and then find that the bank makes it difficult because you can't pay the mortgage shortfall.
Another small consideration
I don't think it's relevant here and now, but it could be in the future. You have an LTV on your home of 51%. Would you get a lower rate on your entire mortgage if you brought it down to 50%?
Or would your buy to let lender give you a reduced rate for bringing it below 100% LTV?