If someone were to ask you how a mortgage works and what is a promissory note, would you know how to explain it to them? The Promissory NoteThink of a promissory note as exactly what it sounds like: a promise. \"A promissory note is your promise to repay the loan. The MortgageThe mortgage contract states that if you don’t repay the loan following the terms defined in the promissory note, the lender has the right to take your property and sell it to pay back what you owe. As we stated above, the mortgage is a component of the entire mortgage loan process which secures the loan for the lender.