​Is stretching for the £800k forever home worth the interest cost, or should we stick to a £600k 'stepping stone' and invest the difference?

Hi all, as the title says my wife and I are on the fence between buying our forever home (~£800k) or buying a home in the (~£550-£650k) region with the idea of moving in 5-10 years.

​Our financials:

​I (30m) earn £52.5k and my wife (30f) earns £81.5k a year. Both receive 10% bonus each year on average.

​We accepted an offer on our flat which has no mortgage for £286,500.

​Between our ISAs and current accounts, we have a combined £166,000.

​Our monthly take home is £7.1k.

​Outgoings differ depending on the house we choose, but after some Gemini help, expect to have an ~£1.5k a month leftover if we went with the forever home or ~£2.5k a month with the stepping stone as well as the difference in deposit (£40-£80k)

​Additional context:

​We have a 7mo child. Would be looking to put in nursery and have help from family. Anticipate about £500 fees after childcare hours.

​Wife unsure if she will stay in her current role after 5 years, would anticipate her salary dropping to £50-£60k.

​Understand there would be additional cost for Stamp duty and moving fees if we chose the stepping stone house.

​The houses/area:

​Looking south London in zone 5 near Epsom/Cheam areas

​£800k home would be turnkey with plenty of space if we decided to have another child.

​Stepping stone houses in the area for the budget range typically need some renovation and would need to move/extend in 5-10 years for the extra space.

​Gemini has said the decision is very close, but when pushed suggested the £800k house. I just have a difficult time thinking about the interest on the mortgage we would have to take out (~480k) as the difference between the two could be invested.

​Would appreciate any advice, especially if anyone has been in the same situation, would be very interested to hear your thoughts and which option you would suggest.

​TIA