That's only one kind of mortgage though - for a while there were mortgages available in the UK where you only payed the interest on the principal but you also payed into a separate saving scheme with the idea that when the latter matured it would pay off the former.
No idea if these are still available, but for a while in the early 1990s you used to get a very hard sell on them - we had one for a five years or so. In reality they are a terrible idea as you are paying interest on a non-decreasing principal which is a shockingly bad idea and then there is the risk of the saving scheme performance as well.
Edit: Of course you got a hard sell on them as they were clearly a terrible idea from the borrowers perspective but were far more profitable than a normal mortgage for the lender.
That said, the interest is a great write off for a landlord, especially if they are personally the originator of the loan to their holding company.
Not just that, but definitely do the math on the monthly payments.
In my case (in Chicago), my minimum monthly mortgage payment was half the monthly rent I had been paying, for a significantly nicer and larger place. Just had to get past the down-payment hurdle.
If you paid $0 on principal your first year, the interest would be $100,000x0.05=$5000
Make it monthly: $5000/12=$416.67 rounded up to $417
On an amortization schedule, the fixed payment is calculated at $537, with $120 going to principal and $417 going to interest on your first payment. Exactly what you would expect to pay. The interest isn't front loaded, it's just the actual accrued interest of what you have borrowed.
When you pay the $120 in principal on your first payment, your debt reduces to $99,880. $99,880x0.05/12=$416 rounded. Therefore, your next payment, still at the fixed rate of $537 is now paying $121 in principal, and $416 in interest.
In short, when you have a large debt, you pay larger interest, when you have a smaller debt, you pay smaller interest. This isn't exploitation, just mathematics.
$536.82x12x30=$193,255.20 Total($193,255.20)-Principal($100,000)=TotalInterest($93,255.20) give or take a dollar.
And so according to your desire, you'd want them to say it is a 93% mortgage.
The reason they don't is that interest rates and compounding are typically done annually. You also have the ability to make extra payments sometimes, which can pay it down faster. The faster you pay the debt, the less interest you pay.
For instance, if you win the lotto, receive a life insurance payout, or inheritance, etc and pay off the loan within the first year, it's no longer a 93% mortgage but a 5% one.
To me, it makes more sense to say, you owe $100,000 your first year, or $98,398 your second year, and that you'll be paying 5% interest over that year.
But that depends entirely upon how long you take to repay it. If you pay the loan aggressively up front, you pay less; if you make minimum payments for as long as possible, you pay more.
Your point seems to be basically that because you can’t do the maths, the mortgage is misleading. That is maybe a fair argument in some cases with financial products. Investment banks are notorious for obscuring the true cost of deals with complicated maths. However this doesn’t seem like a case of that. If the interest rate is 5% APR and you are free to pay it off as fast or as slowly as you like within some bounds, for example, it is absolutely essential that you understand what a 5% rate means to know how the mortgage works.
edit: not to mention that 5% is already a contrived figure not representative of how the interest is actually applied, designed to make it easier for you to understand what you’re charged. Your interest is probably calculated monthly or daily, not yearly. They could present you a nice hypothetical yearly figure, or a nice just-as-hypothetical 93% three-year figure. What’s the difference? Neither of them are real. Your interest is charged monthly, so they’re equally fake and misleading.
The bank is giving you $X to buy the house. You’re paying off a piece of it each month (your mortgage payment). Part of that goes to the interest on the loan, the rest goes to principal. The interest each month is based upon on the remaining principal. That means your payment starts off being mostly interest and gradually becomes mostly paying off principal.
You could say, “But I can just save the full price and then buy the house with no interest!”. Sure you could. But you’re forgetting that you’re living in the house (or renting it out...) while you’re paying it off.