Holding a mortgage for mutual benefit

[Bon Donaldson]

I have been doing some digging and feel that I haven't found what I am looking for.  So for my first post after years of lurking I am looking for creative ways to make this work.  

Situation:  I have a friend who owns his home on paper.  He owes 35k of a personal loan that he used to purchase the property at 10% interest.  He is trying to get on track with his bills and what not but needs some support.  I am thinking about offering financial aid in a way that would benefit both parties by paying his 35k personal loan off and essentially offering a "re-fi" situation.  

Being that I have some knowledge in real estate (buy and hold/ flips) I understand there is a way to do some sort of financing on my end to help out.  I was thinking something like private/hard money long term?  3 year interest only@9% then transitioning to a 7 year amortized.  

I'm trying to get a gauge on what I should do to make this work.  Have a note created?  What legal issues are biggies with this? Is there a better way to handle this situation?  

Thanks to all ahead of time.