I've been reading Condo Bible and it has the following passage:
A solid down payment of at least 25 percent will act as a buffer for you at mortgage-renewal time should interest rates slowdown. If the market drops in value when it's time for you to renew your mortgage, your only bailout, unless you have cash reserves, will be to apply for a high ratio mortgage by utilizing whatever equity you might have in your property - from the initial down payment you put into it.
In general, a solid down payment will enable you in times of trouble, to more safely arrange a new high-ratio mortgage, private financing against your equity, or a line of credit from your bank.
In contrast, if you buy a unit with a small down payment (5 to 10 percent), you may find yourself in a very real predicament down the road for the simple reason that there may not be any equity in your condo unit if the market tanks.
What would happen if I were to buy a condo with 5% down payment and the real estate market tanks 30% and I'm left with no equity? Would the bank not renew my mortgage when it's time for a renewal? What are the consequences? The book, or at least the chapter that contain this passage, does not address this question.