Isco
Isco's current contract will expire in the summer of 2018. Getty

Isco has reportedly agreed to commit his long-term future to Real Madrid by putting pen to paper on a new deal with an annual salary of €6m (£5.4m, $7m). AS claims that Barcelona, Manchester City and Bayern Munich have 'expressed interest' in the midfielder in recent times but Los Blancos have inserted an stunning €700m release clause in the new contract which they believe will end their hopes of signing the player.

Isco, 25, joined Real Madrid from Malaga after being one of the sensations of the European Under-21 Championship in the summer of 2013. It was said that the Manchester City were set to complete his signing then but Los Blancos eventually secured his services in a deal worth around €30m.

The Spain international enjoyed an impressive start to the life at the Santiago Bernabeu but his future at the club came under major scrutiny during the the first part of last season.

In, February Isco himself suggested that he could consider leaving the club in the summer after being restricted to a secondary role in Zinedine Zidane's 4-3-3 formation due to the immovable presence of Casemiro, Luka Modric and Toni Kroos in midfield behind Gareth Bale, Karim Benzema and Cristiano Ronaldo.

Isco's current contract is due to expire in June 2018 and it was said that Real Madrid were also ready to negotiate his departure in order to avoid losing him for free next summer.

Catalan radio station RAC 1 reported at the time that Barcelona offered Isco a signing bonus of €20m to turn down a new deal at Los Blancos and move to the Nou Camp as a free agent once his contract expires.

However, his situation at Real Madrid underwent a dramatic U-turn in the second part of the season following Gareth Bale's injury.

Isco took the opportunity with both hands to establish himself in the line-up during the title run-in, even making the starting line-up ahead of Bale himself in the Champions League final victory over Juventus.

Real Madrid quickly reacted by offering him a new deal and the player suggested that the signing was now only a formality. However, some uncertainty has remained as Los Blancos are yet to announce the new deal despite his current one set to expire in less than a year.

Furthermore, Real Madrid's arch-rivals Barcelona now have fresh money to spend after netting €222m from Neymar's move to Paris Saint-Germain.

Isco tried to play down concerns of the Real Madrid fans earlier this week after he was named man of the match in the 2-1 victory over Manchester United in the Uefa Super Cup on 8 August, insisting that he will sign a new deal sooner rather than later.

AS now claims that a reliable club source has confirmed that the agreement is all but done and will be announced in the coming days.

The reports says that Los Blancos are expecting to hold an official event to present the new deal at the Santiago Bernabeu following the two-legged Spanish Super Cup against Barcelona to be played on 13 and 16 August.

The Spanish publication points out that Barcelona, City and Bayern have made enquiries about Isco's availability in recent times but the player is ready to snub them to commit his future to Real Madrid with a new five-year deal.

Isco, according to the report, has already signed the new contract which is worth €6m-a-year. Furthermore, Los Blancos have agreed to include an stunning €700m release clause in the deal in order to avoid the same scenario that recently saw Barcelona losing Neymar to PSG.