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Comment by rzimmerman | Hacker News Reader

I don’t think I’ve ever seen a mortgage that’s interest-only for a fixed time like that (but I’m not sure - I’m in the US). If you want fixed payments for 30 years the only way that works is if you pay less principal at the start. There’s more outstanding debt with the same interest rate, so the interest is larger.

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They exist. I have a 10/1 io, at which point it becomes a 20 year amortization with a floating rate. The bet was that inflation would eat the principal down and I probably wouldn't be in the house more than 10-12 years anyway

That's really interesting - so your payments are only fixed for 10 years (and at a lower amount, since it's interest-only)? I suppose you're betting that either:

- You'll sell the house before 10 years

- Rates will go down and you can refinance

I'm in a more standard 10/1 ARM for similar reasons - the interest rate was lower and I felt it was a reasonable bet that we'd be able to refinance for a better rate (or worst case slightly worse rate) in the next 10 years.

Nope. I wanted maximum interest rate duration and I'm betting that inflation will be higher than my mortgage interest rate, so it will eat more of the outstanding balance. Adjusted for inflation, my balance will be less than half what it is now. I don't anticipate staying more than about 15 years, and the capped rate is low enough that in the worst case this is still reasonable, and I'll have greater optionality to refi if I have a bigger balance

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