To Stay Or Go – Lower mortgage or Home with Equity

Hello All

This is my second post in one morning…  Any opinions here would be appreciated   My husband and I are early 30's with one toddler and we have recently decided to sell our home (we built 10 months ago) and relocate to neighbouring suburb.

Reason being to lower mortgage and half mortgage term (to 12 – 15 years) we freaked out when we realised how much interest was being paid on loan of $390 over 30 years. We thought we would purchase something else for say $650k and have loan of say $250k for 15 year term.

Our Home Value   $800 – $850k              Mortgage $390k

Used equity in current home in Sept 09 to purchase;
Second home value   $350k                      Mortgage $330k (holiday home and not rented)

Our families think we "have a nice house" so shouldnt move as we may never afford to live here again, however we not too bothered and think a smaller mortgage would be better.  We have own business and last financial year income joint around $120k.  Do we stay or move? Stay and see if possible to buy another property? All we want to do is get ahead a little