The carbon footprint of a mortgage:

800kg CO2e per year for a £100,000 loan at 5% interest

How can a mortgage have a carbon footprint? Surely it just boils down to a few bits of paper or electronic transactions? Look more closely. The bank or building society runs offices, buys computers, uses data centres and sends lots of paper mail. Its people travel – often by air. And it hires third-party services ranging from cleaners and caterers to ad agencies.

When you take out a mortgage or loan, or pay for an overdraft, your interest payments feed all this activity, sending a series of economic and environmental ripple effects out across the country and wider world. We can't see these ripples and we don't stand a chance of accurately counting up their environmental impacts one by one. Instead, to get a rough sense of the carbon footprint of a mortgage, we need to use an approach called input-output, which involves taking the total emissions of the UK, divvying them up into different sectors of the economy and then working out the approximate carbon impact of each pound spent in each sector.

Input-output analysis suggests a ballpark footprint of 160g CO2e for every pound spent on UK financial services. The figure is about the same for other professional services, such as solicitors, lawyers, accountants, therapists and architects.

Of course, this figure should be taken with a small pinch of salt – not least because even if it's accurate for the financial industry as a whole, it isn't necessarily accurate for mortgages specifically. It could be, for example, that banks and building societies are more or less carbon intensive than other kinds of financial companies. Or it could be that small transactions (overdrafts, short-term loans, premium account services and the like) clock up more carbon for each pound spent than large transactions such as mortgages. Nonetheless, 160g per pound of interest payments is a reasonable-enough starting point for this back-of-the-envelope calculation.

If you have a £100,000 mortgage on a 5% interest rate, then each year you would pay £5,000 in interest (plus any actual repayments). At 160g per pound, that would add up to a remarkably large annual carbon footprint of around 800kg. That's equivalent to a couple of short-haul flights or the best part of the typical home's annual electricity consumption.

There are two possible ways to reduce this particular part of your carbon footprint. The first is to borrow less and to use the money saved on interest on to pay off a smaller mortgage more quickly. Or, even better, use the savings to fund some kind of carbon-busting project, such as a rainforest conservation scheme or a renewable energy installation. In reality, though, no one is going to choose a smaller or less expensive house based on the carbon cost of their mortgage.

The other, more realistic, line of attack is to be discerning about which bank or building society you give your money to. A tenth of the sector's footprint comes from printing and postage, so supporting a lender that doesn't do junk mail – and which encourages paperless statements – is a good first step. Even more important is air travel, which makes up almost a third of the financial industry's footprint. It's hard to know which bank is least profligate with flying, nor which is most careful about the other elements of its carbon footprint. But a mixture of internet research and common sense will give you an idea. It's probably reasonable, for example, to assume that the Ecology Building Society, a simple, lean, green-minded operation, goes in for far fewer executive business flights than the high-street giants do.

If you're getting a new mortgage as part of a move, once you've signed the contract, the next carbon footprint to consider may be the impact of doing the place up. Given the surprisingly high carbon cost of some contractors, tools and materials, the facelift might be might be even more significant than the mortgage. But that's a another story…

See more carbon footprints.

• This article draws on text from How Bad Are Bananas? The Carbon Footprint of Everything by Mike Berners-Lee