Principle + Interest Vs Interest only repayments?

A Principal and Interest (P&I) loan is the most traditional type of loan for home buyers. Your repayments each week, fortnight or month are set aside towards paying the interest accrued on the loan as well as paying off some of the original loan - called the principal. Hence the name ‘Principal and Interest’.
When you first start paying a P&I loan, the majority of your repayments will be going towards covering the interest that is being charged, and the remainder contributes to reducing the principal amount owing. Over time, as the amount owing decreases, the interest charges reduce, therefore each payment pays more off the principal.
When you take out an interest only loan, as the name suggests, you only pay the interest on the loan. This means that you are not repaying the principal, so your loan balance does not decrease. An interest only loan improves your cash flow as the repayments are slightly less than a principal and interest loan, but you have to take note that you are not paying the debt off.
Typically an interest only loan are for investors who claim the interest on the loan as a tax deduction, as under the Australian tax system you can’t claim the interest as a tax deduction on the home you live in. Many seek to pay off their home loan as quickly as possible with a principal and interest loan, and use an interest only loan on their investment property to maximise their tax deductions.