My sister recently gave me her iPhone 7+ from T-mobile because she has switched phone companies. The only problem is she owes T-mobile for the phone but I doubt she is planning on paying off the phone anytime soon. It's still pretty new and in good condition, and I want to use it. Since she has not paid it off I know T-mobile has probably put some restrictions on it.
Would unlocking it and using a sim from a different company help or would I have to jailbreak it, which is something I don't really want to do?
I'd do neither, personally. I don't trust or like any unlocking service or jailbreaking, so I would try to check if it's carrier unlocked by this (optionally not contacting T-Mobile to ask them yet to unlock).
If it's locked, I would take the phone to a T-Mobile shop and tell them truthfully the essential facts you know:
You don't have to tell them who / relationship and certainly don't speculate. If they are probing to see what else you know about the phone, don't get nervous and do be polite and deliberate. Just repeat what you told them in pretty much the exact same words and then ask if they can help you. Just keep in your mind - you're notthe previous owner and you're the owner of the device now and this is a chance for them to earn your business.
It's not their "business" if you paid for it or not and they shouldn't tell you anything about the previous owner. It is their business to help you pick out a plan and understand if it has a contract or not and propose another plan if you don't like the one they suggested initially. From some very astute comments, you should probably protect yourself with a written bill of sale if you intend to say you "own" the device. Paying a dollar and writing up a transfer keeps you from lying if you go to the store. If it doesn't work out, you can always sell it back later to the previous owner.
If you can get service in your name and avoid a contract, I'd do it. Then you can look at getting it unlocked after a month or two if you're not happy with your service in getting the phone working and with the service as a user of T-Mobile. At that point, they'll have a much harder time saying you're to be penalized as a paid up customer asking for an unlock.
Make sure that whomever signs into this iPhone doesn't keep "Find My iPhone" turned on. If the device ever gets locked and the user doesn't know the password or can't get the verification code to the account. You will be stuck with an expensive coaster that Apple won't be able to help you with. They will need the proof of purchase and that doesn't exist since only T-Mobile has that and will not give that up until the balance is due.
I would unlock the phone. Jailbreaking doesn't = carrier unlocked.
Jailbreaking is similar to rooting an Android phone and is unrelated to unlocking carrier lock.
Note that The AT&T and T-Mobile IPhone 7 variants, only come with a GSM chip. That means you can’t use an AT&T or T-Mobile iPhone on Verizon or Sprint, since those versions don’t have CDMA chips. (You can, however, take an AT&T iPhone to T-Mobile, or vice versa).
Also note, most of the entire world uses GSM, so you should be fine in 1st world countries like Europe. I'm not sure if other countries are dominated by GSM/CDMA but it's worth researching before travelling. Eg: Most of Northern Canada is dominated by CDMA coverage only, but this is changing as well (albeit slowly).
There are many options on where to purchase an IMEI unlock code, here is what I found after a quick Google.
The #1 IMEI provider I found for iPhone 7 and 7 Plus was OfficialiPhoneUnlock
PS: Shoot your sister some cash!
How I have unlocked phones in the past (Only tested on BlackBerry and Android):
Insert foreign SIM >> If it works, phone is already unlocked!
If it asks for IMEI unlocke code you have a few options:
Enter IMEI Code >> Phone should connect and work immediatley (Try reboot if not)
If it doesn't then what you are looking for is called
APN Settings. Usually your phone will set this up for you, but if needed, you can use google or just call carrier. They should be able to provide this information even without an account.