A very small percentage of private & hard money lenders in the United States will consider a 2nd mortgage, or any junior lien position. It’s a risky proposition for a lender if there is a default, which leads to a foreclosure. Second mortgage private lenders are a bit easier to find in California as opposed to other states. Here are some of the general guidelines for most private lenders that offer 2nd mortgages:

  • Loan Types: Refinance & Equity Cash Out
  • Loan amounts from $30,000 to $10,000,000
  • Combined Loan-to-Value up to 65%
  • Loan Type: Refinance,  Equity Cash Out, Cross Collateral
  • Property Types: Residential or Commercial Real Estate
    • Primary Residence OK if funds used for business purpose

Most 2nd mortgages are used for cashing out equity on a California property. Hardly any private lenders in California will consider a 2nd mortgage for a property purchase. None of the lenders on our platform consider gap funding.

Some lenders will take a 2nd position when cross collateralizing. Typically crossing collateral occurs when a private lender is funding a 1st position loan secured by one investment property, and they take a 2nd position on the borrower’s other property for additional security to reduce the loan-to-value for the loan.

Top California Private Lenders for 2nd Mortgages

Below is a list of the top private/hard money lending companies listed on Private Lender Link that offer private 2nd mortgages secured by real estate in California. All of these companies only lend in California.

Stonecrest Logo

Stonecrest Financial was established in 1987 and manages several funds which are very well capitalized. While most of their 2nd mortgage loans are secured by properties in the San Francisco Bay Area, they do fund a lot of loans throughout Southern California.

Here are some of Stonecrest’s lending guidelines for 2nd mortgages:

  • Loan Amounts from $250K to $10M
  • Combined LTV up to 65%
  • Interest Rates for 2nd mortgages: 9% to 12%
  • Loan Term: 1 to 60 months
  • Property Types: SFR, Condo, Multifamily, Office, Retail, Industrial, others
    • Owner-Occupied Homes OK if loan is for business purpose

Stonecrest Financial has an excellent reputation in the mortgage industry. They have been listed on Private Lender Link since 2016. We have visited their office in San Jose several times and spent time with their executive team.

2nd Mortgage Line of Credit

One of the reasons Stonecrest is the top California lender for 2nd mortgages is their unique line of credit program. Many real estate investors love this option in a scenario where they don’t need to use all the cash out funds right away. Stonecrest can provide a credit line so that the borrower only pays interest on the funds used. This is also a popular option with business owners that need working capital. The loan can be secured by equity in the business owner’s primary residence, or an investment property, or both. Stonecrest will consider using multiple properties as collateral for a single loan.

The maximum loan term is typically 3 years. Stonecrest can also provide their credit line for a 1st mortgage. Or they can fund the 1st as a standard bridge loan at a slightly lower interest rate, and a 2nd mortgage as a credit line with a smaller loan amount. We have not found any other private lending companies in California that offers a line of credit private mortgage secured by a single property.

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SDC Capital logo white bg

SDC Capital is a family office lender that lends in major markets throughout California. The majority of their lending is in Southern California, but they also fund a number of 2nd mortgages in the Bay Area and Sacramento.

One unique thing about SDC is they rely on their own in-house valuation and hardly ever require formal appraisals. This could save a few days in the closing timeline for residential properties and 1-2 weeks for commercial properties. If the subject property is located in Southern California, one of the principals will drive to the property to meet the borrower and do an inspection. For properties in Northern California, they have a representative who will visit the property.

SDC Capital tends to be lower on origination fees (points) than other lenders, but that may not be the case for a 2nd mortgage. It really depends on a number of factors – location, CLTV, property type, etc.

Here are some of SDC Capital’s guidelines for 2nd mortgages:

  • Loan Amounts from $100K to $2M
  • Combined LTV up to 65%
  • Interest Rates for 2nd mortgages: 9% to 10.99%
  • Loan Term: 3 to 24 months
  • Property Types: SFR, Condo, Multifamily, Office, Retail, Industrial
    • Owner-Occupied Homes OK if loan is for business purpose

SDC has been listed on Private Lender Link since 2016. We have visited their office in Burbank (Los Angeles County) and meet their executives at industry conferences every few months.

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brookline group logo

The Brookline Group sounds like a big company, but it’s really one trust deed investor, Michael Klemens, who lends out his own retirement funds. He has been offering private money loans since 1989. He is licensed by the California Department of Real Estate, so he also originates and processes the loans himself. Mike will consider properties throughout the state and has funded a lot of 2nd’s, 3rd’s and even a few 4th mortgages.

Mike’s maximum loan-to-value for a junior lien is 50%, which is much lower than the other lenders mentioned here. He hardly ever requires an appraisal since the LTV is so low. If the property is located within 100 miles of Los Angeles, he will likely drive to the property and meet the borrower in person.

Here are some of The Brookline Group’s guidelines for 2nd mortgages:

  • Loan Amounts from $30K to $1.2M
  • Combined LTV up to 50%
  • Interest Rates for 2nd mortgages: 8% to 12.50%
  • Loan Term: 1 to 60 months
  • Property Types: Land, SFR, Condo, Multifamily, Commercial
    • Owner-Occupied Homes OK if loan is for business purpose

Mike Klemens has been listed on Private Lender Link since 2018. We have spent time with him at several conferences hosted by the California Mortgage Association which is where we initially met.

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Click the green buttons above to view each lender’s profile. Private Lender Link has found all of companies mentioned above to be very reputable.  If you make contact with them, please mention that you read about them in this article.

Contact us if you’d like any lender recommendations for private and hard money lenders in California and other states throughout the country.