Interest-Only Mortgage = Lower IRR?
Just wondering if you happen to have come across a property investment using interest-only mortgage, i.e. mortgage where you will pay only interest on a monthly basis, and lump sum of principal at the end of mortgage period.
When comparing the investment using regular mortgage where you pay principal on a monthly basis (see attached) vs. investment using interest-only mortgage (also attached), I found that the interest-only option yields lower IRR.
Does this actually make sense or am I calculating this wrong? Does this mean a regular mortgage is always a better option than interest-only mortgage?
Also, as a noob in real estate investments, how do people usually make their calculations for their investment decisions? Is it using IRR method as I have done or is it some other metrics?