A gift to a child of €225,000 would use €222,000 of their threshold assuming no prior gifts. Your husband may have a threshold together with the €3,000 per annum per person small gift exemption.
The deemed gift on the €175,000 is the amount of interest foregone by the parent so say 1%. You should have a written agreement confirming the terms of the interest free loan so that there is no dispute at a later date. The agreement should be witnessed by a third party in case your parents were to die and a query arise about the loan.