Laurence, that sounds like a very near relative to the 'interest only' mortgages that I heard were about to become more common than a regular mortgage. In those, you pay ONLY interest the first few years, then you have some catching up to do. Generally your first payments are about 20% cheaper than a regular mortgage.
The pitch is you can afford more home up front, without a higher payment. Later when you are making more and inflation is making those mortgage dollars worth less, the higher payments wont feel so bad. In the meanwhile the bank makes a lot more on the interest. Sounds pretty good, no? Unless of course inflation doesnt take off, wage increases arent anything to write home about, and/or the bottom drops out of the RE market in your area. In that case you'll probably get to experience first hand the joys of the new bankruptcy laws...