The risk is astronomical. In Canada they don't even have tax deductibility of mortgage interest and prime is much higher than here in the states. Yeah it could work but it could also blow up in his face. I personally think it's an idiotic move given the risk. But if he must a 30 year fixed as someone mentioned earlier is the way to go... If he can afford the monthly payments he will have the best chance of surving this move. A APR or I/O mortgage would be near suicide because rates are going up and prices may fall in the near future.
Why are you so sure rates are going up? Bill Gross doesn't think so. The Fed is close to ending its rate hike campaign.
Can't get 30 yr fixed in Canada. 10 years fixed on a 25 year mort. is the most I've seen. On the plus side, our bankruptcy laws are a lil' more forgiving in comparison to the US, after the recent outrageous changes made by the Neocons.