With sufficient saving over the interest-only period, the health of their balance sheet need be no different than it would have been with a P&I loan.1 If, however, a borrower spends the extra cash flow available to them during the interest-only period (compared with the alternative of a P&I loan), they will need to make sizeable adjustments when that ends.
They will have to either secure additional income by that time or reduce their consumption (or some combination of both). That will be more difficult and possibly come as a shock to the borrower if they haven’t planned for it in advance.