With Zinedine Zidane confirming that James Rodriguez won't be sold this summer, Isco is said to have been told that he can leave the Los Blancos before the deadline today.
Tottenham and Malaga have emerged as the favourites to land him on loan, as Madrid are not keen to sell the 24-year-old, with a transfer ban from next window looming over their heads.
Spurs director, Daniel Levy is keen to add firepower to Spurs' attack before 11 PM BST, the time when the transfer period ends.
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Spurs had enquired about a loan, with a deal to make it permanent next season, but Real are adamant about keeping Isco in their books. Isco has fallen down the pecking order, with the emergence of Asensio, Lucas Vazquez and Mateo Kovacic.
It makes sense for the European Champions to let the 24-year-old go on loan to get some playing time under his belt. The midfielder, though, is not keen for a move anywhere as he wants to prove his worth at the Bernabeu.
Pochettino is keen to add Isco to strengthen his midfield, and Isco may be inclined to a move to London as Spurs can offer the Spaniard Champions League football this season.
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Malaga are the other team who are trying to work out a deal to bring back their former player to the club.
Isco had a brilliant first season for Real, where he scored 11 goals and 7 assists in 53 appearances for the Los Blancos. His performances took a downward turn in the next season and had to settle for a place in the bench after Real Madrid signed Toni Kroos and James Rodriguez.
His lack of game time denied him a place in the Spain's squad for the Euros, which was said to be a huge setback for the 24-year-old.
Busy deadline day for Spurs
Spurs, who are keen to sign Isco, are expected to be busy today. The club had a bid turned down for Crystal Palace winger, Wilfried Zaha in the past few days.
They have now ended their interest in signing the former Manchester United winger.
Spurs sold Ryan Mason to Hull City yesterday and have enquired about Newcastle's Moussa Sissoko. The Magpies have set a £30 million price tag on the Frenchman, which is deemed too high by the Spurs board.
Germany’s Max Meyer is another name linked with a move to the London club.
