This study investigates the hygrothermal impact of various internal wall insulation (IWI) systems on embedded intermediate floor joist ends by utilising, with a novel approach, transient hygrothermal modelling with the WUFI® Pro software and three-dimensional steady-state thermal modelling with TRISCO3D. The research evaluates the effects of thermal bridging on heat flow and assesses hygrothermal performance across four UK climate zones, two orientations, and multiple IWI retrofit methods. Five IWI strategies were initially examined: no internal wall insulation in the floor void, 95 mm glass mineral wool with variable or standard vapour resistance membranes, 60 mm phenolic foam with plasterboard, and multifoil insulation. Additionally, three brick types and two stone types with varying absorptivity were considered. The findings indicate that the 95 mm glass mineral wool with a variable vapour resistance membrane performed best, showing no to moderate risk in 19 of 50 modelling cases. Regarding specifically the risk of rot at the embedded timber joist ends, avoiding the installation of IWI between the floor joists (whilst maintaining the airtightness of junction) presented the lowest risk with 28 in a total of 50 modelling cases showing no risk to moderate risk. However, as this option is associated with unintended consequences such as excessive heat loss due to thermal bridging and risk of mould growth and surface condensation due to low surface temperatures within the floor void, further investigations took place to identify the optimum IWI strategy in the intermediate floor void. Further analysis identified an optimal strategy using vapour-open, hygroscopic wood fibre insulation in the floor void, tailored to climate, orientation, and wall type, to significantly reduce rot risk, heat loss, and condensation. This approach ensures balanced hygrothermal performance while mitigating unintended consequences.