Xabi Alonso has announced his "happiness" at putting pen to paper on a new deal that will keep him at Real Madrid until 2016.
The two-year extension ends speculation that the midfielder had decided to leave the Santiago Bernabeu on a free transfer at the end of the season.
However, Alonso insisted that there was never any doubt that he would commit his future to the club.
"Real Madrid is the best place I could be," Alonso told reporters on Friday. “I feel at home here.
“There was no reason to look for alternatives. There have not been any offers because I decided I wanted to be here."
The Spain international added that coach Carlo Ancelotti had played a key role in his decision to stay put, alluding to their great understanding of one other both on and off pitch.
Alonso stated: “He was a midfielder and knows what this position means. It has been very important and I thank Ancelotti for his words and support.”
With his future at the club confirmed, Alonso is now focused on trying to help Real Madrid finally claim their 10th European Cup title.
“I won the Champions League with Liverpool but I want to win it with Real Madrid," he declared.