The financing of the plan was approved at the club’s annual assembly, with work due to begin on the stadium at the start of next year.
The plans include two new towers and a 360 degree screen that will be visible to all fans. A retractable roof will also be installed so that games can go ahead in any weather.
Along with the upgrades there is also scope for a sponsor to purchase the naming rights for the stadium.
The proposed changes do not include an expansion to the stadium’s capacity of just over 81,000.
Madrid president Florentino Perez believes the completed project will bring in an extra €150m per year.
Perez said the loan would amount to up to €575m, over a maximum period of 35 years, without “any impact on sporting activity”.
“It will be more modern, more secure,” Perez said. “There are two objectives: to improve the comfort and accessibility for our fans and secondly, to obtain more income.”