I was with charter mortgages too. Basically it would appear they went bust and sold their mortgages on. When this happens another lender buys their debt off them for a low price. In order to recoup their losses they offered people a discount on their loan if they repayed the outstanding debt. ie if you had a mortgage for £80k and an equity loan of £10k they discounted the £10k if you payed back the £80k either by selling or re-mortgaging. The other lender would probably have bought the debt for less than the £80K. However as it appears your bank have not made you this offer as they are a long standing bank/building society it doesn't really matter.
If you went with the open market home buy scheme you should basically have 3 loans. The morgage, and 2 equity loans, 1 with the lender and 1 with the government. You need to work out how much you owe Yorkshire bank in total including the equity loan and if the value of this house will cover this.
For example if your mortgage is for £80k and your equity loan is for £10k your house needs to be worth £108K for you to be able to re-mortgage. This encorporates the £90k oustanding debt and 20% equity nationwide would need as they will only give an 80% mortgage.
If the value of your house will cover this then nationwide will take this on and have your equity loan with the government running along side.My 4 walls just sign what is called a deed of postponement. As far as I am aware natiowide are the only company that do this at the moment and this was last year? so may not do it anymore. I would contact them and make and maybe make an appointment with a mortgage consultant.
hope this makes things a little clearer?