Modric has been linked with a move to join Inter Milan this summer.
The 32-year-old had a good outing at the 2018 FIFA World Cup, leading his nation, Croatia to the competition final where they were defeated by France 4-2.
The midfield maestro also won the best player award (Golden Ball) of the World Cup.
However, Spanish news outlet, Marca is reporting that Inter will be disappointed because Modric has reached an agreement with the Los Blancos’ executives to remain at the Bernabeu.
The report claimed that a new deal has been lined up for Modric, who has been in Madrid for six years since joining from Tottenham, to see him paid on level terms with Real Madrid captain, Sergio Ramos.
The report also claimed that Modric’s new contract reflects his importance and the value placed on him by the club’s hierarchy understood to want to tie his future down.
Modric has made 257 appearances, scoring 13 goals since joining Madrid in the summer of 2012.
He won 14 trophies since then including the last three consecutive Champions League titles.