WWYD - buy a much needed bigger house at a good price now, or get our financial house in order?

[NobodysPerfect]

Currently we have a mortgage that is interest only with no endowment etc, our house is lovely, but we feel it's too small for us and 3 dc's.

We could sell the house and buy another larger one nearby and afford the payments on it, but only if we do interest only again.

We don't have any life insurance and we need to get some.

We don't have any pension and are in our 40's.

Do we stay put, change our mortgage to repayment and start paying into a pension, but continue to feel fed up in a small house? or do we sell up and buy a new bigger house in the hopes that as time goes by we can gradually change the mortgage to repayment and start a pension?

Am tempted to buy because we can get a much bigger house right now with low prices than if we'd done it 12 months ago.

Could you extend?Unlikely to sell easily atm although there are some batgains around

No, well yes, but only living space and what we need is another bedroom.

Estate agent has valued ours and we're thinking of putting on the market to see what happens.