Question: My partner and I are looking to buy at the moment. I won't get into all the details but we live in Germany, have a budget in mind and have talked with a few brokers and providers.

Our idea for the monthly repayment budget comes from what we pay in rent now as well as what we'd pay if we rented a property in a similar bracket to the ones we're trying to buy. And, of course, what we think is fair for the market.

We've had various estimates for mortgage offers and many are offering more than our initial budget idea so my question is is it better to take a higher mortgage for a more 'desirable' property and pay more per month if you can afford it or to be conservative and take a lower mortgage. We're currently finding the prices are a higher than we planned.

I realise it's subjective regarding risk etc but any input on pros and cons or going closer to your financial limits (within reason) with your mortgage payments would be greatly appreciated.

EDIT: I added a little more context to a comment on an answer that might be useful extra information:

We're buying in Berlin, Germany that has had record rises in both rent and purchase prices in recent years. Seems set to continue. Interest rates are at near record lows and I've consistently had offers of around 1.5% for 15-20 year fixed rate deals. We've been advised to lock in current rates for as long as possible, especially as there is talk of a rate rise here next year. Additionally, I have been offered options for a type of income insurance for the payments. So current numbers would have us spending 25% of net income per month.

Answer: 
The only reason I can think of to really stretch yourself on something like this is if inflation is really high, well above the mortgage rate. In that situation you would expect your income growth to outpace the mortgage payments. This would also suggest that the value of the home would increase. I see something about 16% taxes. That seems insanely high if that's annual so I'm guessing that maybe that's a one-time sales tax or this doesn't work the same way as property taxes typically do in the US. If you have to pay 16% per year on the current value of the home, I can't see how prices could continue to rise beyond income levels.

I would not buy more home that you need simply because housing prices are going up. Even if they do, what's your exit strategy? If you sell it and buy another home, that one is going to be expensive too. And you likely will not get such a great interest rate. You really can't cash in on a major increase in your home value unless you downsize significantly, get out of the housing market or move somewhere else more affordable.
I'm currently in the process of buying a house and would recommend against taking a mortgage that's much higher than the rental rate you're paying now.

You've addressed the principal and interest aspects of a home mortgage, but one key difference between renting and owning is maintenance. It's 100% on you when you own.

For my personal situation, that includes spending some money right after closing to get the house move-in ready (there's some projects we want to do that are easiest without a bunch of stuff on the floors), planning for replacement of some major appliances in the next 5 years, maintaining the lawn area, plus unexpected issues. Furthermore, we are talking about some upgrades we might want to do in the next 5-10 years, which would need to start being saved for. Anyways, all those costs are above and beyond your monthly mortgage payment, so it's definitely helpful to have reserves.