Advice on Mortgage app with price change

mstopham

I am looking for some help before I contact the mortgage company (as based on advice I may or may not be cancelling the application)
The scenario is that I had an AIP until 16th December.
On 16th Dec we were told the vendor would accept £90,000 as a purchase price. We put an offer in of £88,000 but privately agreed we would go to the £90,000 if it was rejected and started the mortgage application.
I asked the mortgage advisor what would happen if the price went down and they said that would be no problem, inform them and they would recalculate figures etc.
Next day our offer of £88,000 was accepted.
However later that same day another offer that had been on the table managed to get their finances in order (I was told by the EA that the offer was £93,500)
So they have accepted that.
The EA has told us the vendor may be willing to go with us for a higher than £88,000 but lower than £93,500 offer because we have demonstrated we are serious, ready etc.
We have already tabled £90,000 and are awaiting to hear back on that but I would like to know if there are any know issues with increasing the purchase price on a mortgage application once the process has started? It would still fall within the multiple of income amount and the LTV amount.
A second question is, we have just received the paperwork for the mortgage application so nothing has been done to my knowledge yet by the bank in terms of sorting out a valuation etc, what are the likely (if any) costs associated with cancelling the application at this stage?