We examine the influence of the excess of interstitial Fe on the magnetic properties of Fe1+yTe compounds. Because in iron chalcogenides the correlations are stronger than in the iron arsenides, we assume in our model that some of the Fe orbitals give rise to localized magnetic moments. These moments interact with each other via exchange interactions as well as phonon-mediated biquadratic interactions that favor a collinear double-stripe state, corresponding to the ordering vectors (±π/2, ±π/2). The remaining Fe orbitals are assumed to be itinerant, giving rise to the first-principle derived Fermi surface displaying nesting features at momenta (π, 0) / (0, π). Increasing the amount of itinerant electrons due to excess Fe, y, leads to changes in the Fermi surface and to the suppression of its nesting properties. As a result, due to the Hund's coupling between the itinerant and localized moments, increasing y leads to modifications in the local moments' exchange interactions via the multi-orbital generalization of the long-range Ruderman-Kittel-Kasuya-Yosida (RKKY) interaction. By numerically computing the RKKY corrections and minimizing the resulting effective exchange Hamiltonian, we find, in general, that the excess electrons introduced in the system change the classical magnetic ground state from a double-stripe state to an incommensurate spiral, consistent with the experimental observations. We show that these results can be understood as a result of the suppression of magnetic spectral weight of the itinerant electrons at momenta (π, 0) / (0, π), combined with the transfer of broad magnetic spectral weight from large to small momenta, promoted by the introduction of excess Fe.