Heiter Iska (borrowing on interest)

Is there room to be stringent and not take out a mortgage, even though there is a heiter iska (a document that turns a loan into an investment, thus allowing to lender to charge an interest), which I sign personally with the bank? Please provide sources.

A Heiter Iska that has been written by a knowledgeable rabbi and signed by you personally (as opposed to relying on common Heiter Iska, which is kept somewhere in the bank) can certainly be relied upon – and that’s the halacha. Nevertheless, we can’t say that a modern Heiter Iska leaves no room for doubt whatsoever. Thus, one who can be stringent upon himself should be blessed.

However, if the matter in question is essential to your quality of life, such as buying an apartment, you should consult with a Rabbi who knows you personally. This just may turn out to be “a stringency that brings about a leniency”. That is, you should check thoroughly whether not owning a suitable apartment might negatively affect your spiritual growth more than relying on a Heiter Iska.

See Shulchan Oruch, section Yore Deah, ch. 167, §1 and all the commentaries there that discuss this question at length.