Think of it from the bank's perspective. When they give you a loan, they want to profit from it. Now how much they profit (on average) from a loan of a fixed length depends mainly on two factors: The interest rate and the risk of not getting some or all of their money back.
The interest rate is something they control, while the risk is more or less given to them by the type of loan (e.g. mortgage vs. consumer loan) and by how a reliable they judge you to be when it comes to payment (e.g. income, previous transactions and other debts in the form of credit rating and so on). So, if the risk is high, they will charge a higher interest to offset this (or decline to give you a loan), while for a low risk, the interest has to be lower as well, otherwise you'd go to a competitor instead.
Now the reason why a mortgage normally has a low interest rate is that it is a low risk investment for them, because there is a house involved as a security. Even if you somehow manage to bankrupt yourself, they'll still can get their money back by selling the house. So from this point of view, they do not care what you use the money for or how much you pay down. The one thing they care about is that there is water-tight paperwork that allows them to recover all debts by selling your house if they have to.
Everything else is just a consequence. For example they'll send the money directly to the seller not because that specific money needs to be used specifically for this, but simply because both transactions need to happen at the same time. They don't want to hand out the money before you own the house and the seller won't give it to you until the money is there. And in particular they want to make sure that they can sell the house for more than what you owe them.
If you consider the costs involved in selling a house and possible missed interest payments, what you owe them in the end might be more than the initial loan. Similarly, the house might loose in value due to lack of maintenance or a general bad real estate market. This is where the down-payment comes from. To cover for those eventualities, they simply want the total amount of the loan to be lower than what the house sells for in order to make sure they can recover everything. Your down-payment then simply covers the difference.
Now this finally gets us back to your question. If you want to take out more money to invest somewhere else, the difference between loan amount and house price gets smaller. Thus the bank runs a higher risk of not getting their money back and to offset this, they'll increase your interest rates. Think about it: From the point of view of the bank, taking out an additional 5% of the buying price for something else is identical to you just getting a loan with 5% down-payment instead of 10%.
They might still want to do it, but to compensate for the risk, they'll increase the interest rate accordingly. It might have worked for going from 60% to 40% down-payment, but this close to the full buying price the additional risk for them will be nearly as high as for an unsecured loan, so you are unlikely to make profit of this.