Pay off second mortgage via private lending equity pull?

[Bryan Watson]

I am trying to help a friend out. They have 2 mortgages on their property (150k primary from property purchase and 220k secondary for rehabs) with the home now valued at 435k-465k. They are looking to pay off that second mortgage with a private lender terms being an equity pull with a $230k loan with 18mo balloon. 

I understand the value of the home being greater than the mortgages makes the risk not so bad, but what I feel a bit confused on is do private lenders ever do these second mortgage payoff deals or does it only depend on interest rates etc. ?

I feel like I dont totally understand the structure/benefit of the terms on either end, so any knowledge of what would make this attractive on either side of the deal would be appreciated. I am sure it comes down to interest rates but I am curious if there is more to it that I dont see.  Thanks