If I was in your shoes, I would knock 120k immediately off the mortgage, as your loan to value ration is very low I would approach your bank for an improved interest rate on the mortgage if they are not forthcoming switch to NIB.
At this point you will be paying about 700-800 less on your mortgage plus you will also have 30k left from your lump sum. You could do 2 things, firstly open a savings account in the childs name & put 10k into it. Secondly, with the additional saving you are making of 700-800 you could make an split this saving 3 ways, into your pension, as an additional payment against your mortgage and finally into the childs savings account.
No point rushing into buying a property now for the Child & putting yourself under extra pressure, who knows where’s the child will end up in college or living!