An Interest Only home loan means you only repay the monthly interest on the amount borrowed for a set term of one to five years. No repayments are required to reduce the principal amount borrowed, which means the loan balance doesn't reduce.
At the end of the Interest Only period, the loan will change to a 'Principal and Interest' loan and you'll start repaying the amount borrowed, as well as interest on that amount. Your loan repayments will be higher for the remainder of the loan term than they would have been if you had made Principal and Interest repayments from the beginning of the loan, because you will have less time left in the loan term to pay off the principal amount.
Learn more about Interest Only Home Loans