Enter the interest payments as deductible special expenses for the years you will be paying interest only.
Your existing home during this period should be entered as having no mortgage.
Here's how you represent resuming the normal pay down on the mortgage when the interest only period is over.
- Enter a future change of home in the year that you will resume the regular mortgage payments. "Purchase" this new home for the same price value as you have in the current market value of the existing home. This is easier to calculate if you are assuming a 0% real appreciation rate on the home.
- The down payment: The down payment (e.g. 25%) times the value of the home should equal the equity at the time of this pretend sale/purchase. If your home was valued at 1,000,000 and you are resuming the regular mortgage 5 years from now, you would sell that home and purchase a "new" home for 1,000,000 and put 250,000 down payment if you had $250,000 in equity ($750,000 loan yet to be paid) in this home at the time of this pretend sale/purchase. If you had no mortgage on the home, you would use a 100% down payment.
- Where did you get the $250,000 for this down payment? Remember, you just "sold" a 1M home that had 750,000 in equity and thus you netted 250K which you then turned around and used as the down payment on the "new" home for 1M.
But remember to change the default 6% sale charge to 0% in Settings/Assumptions > Other so that you are not assigned the default 6% sales commission on the pretend sale of your home.